Fiduciam expects £200m CBILS loan requests after scheme extended

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Fiduciam CEO Johan Groothaert says the firm expects to receive a further £200million in requests for Coronavirus Business Interruption Loan Scheme (CBILS) loans before the end of November.

Groothaert was speaking after Chancellor Rishi Sunak extended the scheme by a further two months until November 30 and on the back of already receiving £430million of loan requests since it became an accredited CBILS lender on July 22. The number of requests then increased towards the end of last month as the original September 30 deadline approached. 

And Groothaert said: “We have already seen more than £430m in loan requests since we became an accredited CBILS lender in early July. As a result, we have reallocated a substantial amount of our resources to handle the CBILS application volumes.

“There has been an increase in applications the closer we got to the 30th September deadline, so the extension of CBILS to 30 November was both welcome and necessary with many businesses still facing financial difficulties.

“It is encouraging to see that most of the loan requests are of good quality.  Many SMEs remain cash strapped whilst their business fundamentals are very strong. Whilst central bank initiatives typically do not reach the SME segment, CBILS does, providing these businesses with an opportunity to weather the crisis.

“With the Chancellor having extended the deadline for new CBILS applications by two months, we expect to receive a further £200 million in requests.”

CBILS, which is delivered through British Business Bank accredited lenders, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5million to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

The types of borrowers and businesses applying to Fiduciam for CBILS loans are hugely varied, which demonstrates the need for these loans across the whole spectrum of the economy. They have ranged from automotive firms to children’s nurseries and from hotels to housebuilders. All of the businesses are strong viable businesses that are just struggling to weather the current story of Covid-19.

A recent loan to be approved was a £840,000 loan to a children’s nursery in North East London. The nursery is a case in point; it qualified for the CBILS loan because it met the requirement of being a viable business before the outbreak of the pandemic and one that is expected to do very well in a more normal trading environment, despite having only been operating for four months. 

It was forced to close due to the lockdown, whilst still having to meet debt service payments of £113,000 per annum. Fiduciam provided a two-year CBILS loan which decreased the debt servicing cost of the nursery by 64 per cent for the next two years. This put the nursery on a stable financial footing, also allowing it to deal with potential future Covid-19 hurdles.

Carl Eldridge is a journalist with more than 25 years’ experience working on local and then national newspapers, including a spell on the City Desk at the Daily Express, before switching from print media to the internet.

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