What next for businesses turned down for CBILS?

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The government’s Coronavirus Business Interruption Loan Scheme (“CBILS”) is now up and running. While attractive, it has not been the answer for every business and with government furlough payments currently set to end in June, many will now be facing difficult decisions about the future.

Even businesses which have not been able to secure CBILS funding have other avenues open to them, however, and the earlier that these are considered, the more options are likely to be available. Geldards’ Restructuring team have the following five recommendations:

  • Manage your cash. Take control of your cash flow by reviewing or cancelling direct debits and evaluating non-critical payments to see if they can be deferred. Make sure you have taken advantage of all the government measures open to you that provide extra time to pay, e.g. for PAYE.
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  • Investigate other forms of funding outside of the government scheme. Being rejected for a CBILS loan does not mean that you won’t be able to secure finance elsewhere. Various forms of funding are available from mainstream and specialist lenders – not just traditional loans but other options such as asset finance and invoice factoring or discounting.
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  • Talk to your existing lenders. You may find that your current lender can help in ways that don’t involve further borrowing, for instance by suspending repayments or extending the term of existing loans.
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  • Take advice in relation to the options available.Restructuring the company could increase efficiency now so that the business can be stabilised and ultimately returned to financial health. Even if the business is insolvent, some or all of it may be able to be rescued via a CVA (a binding agreement between a company and its creditors) or through a sale by Administrators.
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  • Watch for further updates. The government has also announced the creation of a new restructuring procedure which would allow companies to apply for a 'business rescue moratorium' to prevent creditors from taking enforcement action while restructuring options are considered. The draft legislation is yet to be published, however if this takes the form of previous proposals then it could be extremely helpful.

Our restructuring experts are working remotely and are ready to assist you.

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