"Businesses in trouble now who were previously good quality, well-performing firms that we would have provided finance to outside of CBILS, are very much our bread and butter under this scheme."
The uptake for CBILS has been exceptional. Many lenders, including Atom, are facing high volumes of applications against a backdrop of a time-limited scheme and, as such, good quality and well packaged applications are essential.
The application process is detailed and can be complex, so here are some tips to make sure you have the best chance of success before the scheme closes.
1. Give us the full story
Without knowing the full details of an application it makes it incredibly difficult to make a thorough assessment of the case. It’s a misconception that less is more and it inevitably leads to unwarranted back and forth between you (the broker) and our underwriting team to get to a decision.
This can be frustrating on both sides and wastes a lot of time. This means we need brokers to help us with a really good level of detail upfront and at the beginning of the process.
2. Do we, or indeed do you, fully understand the deal structure?
This may sound like a very obvious question but who is the borrower? Is it a group of companies, a parent company, an Opco/Propco structure or something more complex?
We need your help as the introducing broker to get to the right conclusion quickly. When these haven’t been understood properly from the outset the make up of deals can change and cases that looked viable no longer are if they then fall outside of our lending criteria.
3. What has been the impact of Covid-19 on the business?
All CBILS applications are only eligible for the scheme if they have been impacted by Coronavirus. You will need to explain what’s happened as a result of this.
Additionally the scheme rules state applications will not be eligible for businesses who were ‘in difficulty’ prior to the pandemic. There are specific rules around this so get in touch with your Business Development Manager to discuss before submitting the case.
We need to know the truth. Your case will not be declined because the business is now in trouble due to the current environment - the purpose of the scheme is to help businesses for just that reason!
4. What’s the way out?
Businesses in trouble now who were previously good quality, well-performing firms that we would have provided finance to outside of CBILS, are very much our bread and butter under this scheme.
We do, however, need to know in detail their plans for recovery over the coming months/years. What adjustments will they need to make, what is the business trajectory with financial assistance and how will the money be spent to aid this?
5. How will the loan be spent?
A large number of our applications will use some of the finance as working capital. This is fine, but we need the detail of what it will be used on and how this will enable their recovery plan.
6. Financial accounts
Final year-end accounts are required and management accounts may also be required if the year end is more than nine months ago. The date companies need to submit accounts to Companies House does not change the requirements of a lender necessarily. This can severely hold up the application and is a core requirement so please make sure you can get a hold of these in a timely fashion, ideally prior to submission.
7. Complete application form
At Atom, we’ve recognised common themes that have resulted in an incomplete application form. For example, if interest-only has been requested, what is the benefit to the business?
Another factor is the age of the applicant. Individuals in the business must be no more than 80 years old at the end of the repayment term. If they will be more than 70 years old at the end of the repayment term we will want to see evidence that a succession plan is in place, for example, sale of business or family take over.
It’s also worth noting the need for supporting documents. If the individuals have any investment properties, we would like to see their property schedule.
