"During the Covid-19 crisis, banks are too short on resources to consider new customers."

With the Coronavirus Business Interruption Loan Scheme (CBILS) application approval rate across the country stubbornly under 2%, you do not have to look far for examples of rejected applicants. Whilst on that subject, my colleague Colin Burns will be releasing a blog soon that focuses on reasons for rejection – follow us on social media to find out first!

So, you needed CBILS emergency funding and by approaching your bank first, you did the right thing? During the Covid-19 crisis, banks are swamped and too short on resources to consider new customers so it’s your incumbent who is most likely to give you audience.

But sadly, and for whatever reason, your CBILS application has been rejected. So, what options remain for you? If you are pondering this, assistance from a professional to help you explore the remaining alternatives could be invaluable.

1 – the Other 40 accredited lenders

During this crisis, high street banks are generally not considering new customers and focusing their limited resources on their own book. So, taking your case from high street bank to high street bank is unlikely to bear fruit.

However, with our support and the help of some long-standing banking connections, some of our clients have had the opportunity to present their business case to banks other than their incumbent.

Banks do differ in their lending and sector risk appetite and a working knowledge of this is helpful to put something to someone that ‘ticks their boxes’. But be warned – approaching other banks without someone to pick up the phone to may prove frustrating. Leveraging contacts here is the name of the game (sadly).

The list of original accredited lenders was 40-strong and includes non-bank lenders, such as invoice discounters, asset financiers, regionally or sector focused funders. These “less well known” lenders are less busy with legacy portfolios and are more receptive to new business. Your case may be a good match for them, and a call might be well placed. However, understanding their lending parameters before spending hours trying to get through to them will save much frustration. Here, of course, we can help.

2 – New accredited lenders

Since CBILS launched, several new lenders have already been accredited by the British Business Bank. It is my understanding that another dozen or so lenders are on the way imminently. This has broadened the options with many of these new lenders seeing CBILS as an opportunity. As such they are keen to deploy capital quickly.

Amongst these new funders, we expect to see institutions that are unburdened by legacy issues and are entering the fray willing to seek new SME clients. These alternative lenders are very distinct from the more conventional banks and can offer credit where traditional high street lenders could not, or would not. Yes, margins will be higher. But these margins may be more appropriate to the risk your case presents.

Again, it takes specific expertise and experience of working with the alternative funding market to successfully approach these players. This again, is where we can help.

3 – Presentation of case

My colleagues (Rick Martignetti and Colin Burns) and I are constantly hearing from lenders that there are two main reasons why CBILS applications are being rejected. The first is that plenty of good companies are not presenting their case in the right way. Secondly, the credit risk isn’t suitable.

Have a good look at the submission that you made. Do you fall into the first or the second category? Does your application best present your case, or did you make the error of assuming a CBILS loan was a given or indeed a right?

Many rejected applicants we have spoken to believe a CBILS loan was a matter of process, so the application really did not get the attention it deserved.

We can scrutinise your application package for completeness and accuracy, alongside any detailed feedback from the bank, as well as advising you on maximising other Government reliefs, which is a key pre-condition for approval.

As volumes decrease in the coming weeks, there may be an opportunity to go back to your bank with a better presented and more complete case. But be warned, with the workload at the banks, a second bite of the cherry isn’t a given. Hence our mantra of ‘right first time’.

4 – Commercial Solutions

The alternative funder universe outside of the CBILS accredited lender list is numerous in both lenders and product types. These institutions have already won significant market share from conventional lenders pre-Covid, competing on service, speed of delivery, product range, credit appetite and other aspects. If a CBILS route is not open to your company on the grounds of eligibility (which is universal across lenders), there may still be perfectly valid and workable solutions outside of the British Business Bank framework.

Finally, whilst we at Shaw & Co, and many professional advisers charge to conduct clients’ applications, our fees and minimum loan sizes have been reduced to help as many SME clients as possible. Increasingly more businesses are seeing the value and not the cost.

We work with growing UK SMEs and small-cap PLCs that have funding needs in excess of £2m and regularly approaching £100m. Our clients’ needs will typically be for sophisticated finance products such as cash flow based lending or private equity investments. Our value lies in helping clients access funding that relies on confidence in future trading and cash flows. For a confidential, independent, no obligation discussion on the funding options available click the 'Let's chat' button.