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CBILs and BBLs have ended: What next?

April 1, 2021 | 4 minutes

The Coronavirus Business Interruption Loan scheme (CBILs) and the Bounce Back Loan scheme (BBLs) have come to an end, having delivered over £75bn in finance to British businesses in less than one year.

CBILs and BBLs were extremely successful in providing a fast cash injection to struggling businesses during the pandemic. The 12-month interest free period and 80% Government guarantee made the loans attractive to both businesses and lenders. Whilst the accreditation of alternative lenders meant the loans could be delivered at lightning speed.

However, this level of interest-free borrowing cannot be sustained in the long-run and from now on businesses will need to look to alternative sources for finance.

What will replace CBILs and BBLs?

The Government has developed a new Recovery Loan scheme (RLs) to plug the funding gap left by CBILs and BBLs. Although the Government will guarantee 80% of the finance to the lender, there will be no interest free period on these loans.

It is unclear how many lenders will be eligible to deliver RLs, which raises some concerns about its accessibility.

The strength of CBILs and BBLs lay in the fact that alternative lenders (including Satago) were accredited to deliver them, meaning businesses were able to secure finance at a much faster rate than previous schemes such as the Enterprise Finance Guarantee (EFG), which only managed to deliver £3.3bn in 10 years.

If only a small number of lenders are accredited to deliver RLs, businesses might find themselves caught in a backlog, unable to access much needed cash quickly enough.

Another concern is that, as with CBILs and BBLs, businesses will need to prove that they have been impacted by the pandemic in order to be eligible for RLs. This eligibility criteria cuts out any business that has continued to trade as normal during the pandemic, meaning healthy businesses may be given the cold shoulder by some lenders.

Invoice finance

For businesses that trade B2B and on credit terms, invoice finance can provide a fast and flexible funding solution.

As the country opens up over the summer and businesses resume trading, invoice finance will become an important product for firms whose customers take 30 days+ to pay their bills. For these companies, invoice finance is an essential tool to free up cashflow.

The speed and accessibility of invoice finance is an important factor. Unlike some business loans, taking out invoice finance will not necessarily require a personal guarantee or debenture and approval times are short.

Satago makes the process even faster. Our platform connects to accounting software and automatically displays which invoices are eligible for finance. Businesses can simply click to apply and, once approved, will receive funds in the bank within 24 hours.

To find out more about invoice finance from Satago, sign up to the platform today.

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