Chancellor Rishi Sunak announced a radical package of measures to help businesses and employees on Friday afternoon (20 March), on top of those announced in his earlier Budget.

The British Business Bank has now put in place special financing facilities via the 40-plus accredited lenders that were already working with it on the Enterprise Finance Guarantee scheme (EFG), with Compass being one of those lenders.

Work took place day and night over the weekend to finalise the details, and the new package of measures – the Coronavirus Business Interruption Loan Scheme, or CBILS – went live yesterday (24 March).

“This has been an incredibly comprehensive and impressive effort to show government support for SMEs,” said Compass Business Finance director David Bunker.

“They have piggybacked onto the EFG scheme to quickly deliver liquidity to SMEs in this hour of need. It is enabling liquidity in the market to continue, and enabling improved access to money in what would normally be times of credit restrictions.”

The scheme is aimed at companies that had a viable business before the pandemic struck, and through no fault of their own find themselves in need of finance because of the economic impact of the virus.

The key attributes of the CBILS scheme are as follows:

• Available for UK-based firms with sales of up to £45m
• Maximum facility of up to £5m
• Repayable up to six years for term loans and asset finance, repayable up to three years for overdrafts and invoice finance
• No fees for SMEs to access the scheme
• Interest cost for first 12 months paid for by the government
• Government backing provides the lender with an 80% guarantee
• Amount of government funding available is not capped and will be demand-led

“We want people to contact us, and we’re already talking with a range of companies from third-generation family businesses to newer start-ups – people who’ve been dedicated to running respectable companies and find themselves in a situation that is totally out of their control,” Bunker added.

Some print firms have already reported issues with their own banks requiring personal guarantees and detailed financial forecasting that is simply impossible to put together in the current situation.

Bunker said the CBILS scheme will enable lenders to relax normal credit criteria to access these funds.

“Not all banks have access to CBILS and the level of information some are asking for is unrealistic, how can anyone prepare a cashflow forecast currently?” he stated.

“The government is making it as easy as possible to deliver this finance and the totality of what the government is doing – including the Coronavirus Job Retention scheme and tax reliefs – is hopefully enough to get people through this,” he stated.

“As an accredited partner of the BBB it’s been impressive watching all the government agencies at work to put this in place. Along with our other partners in the industry it’s now our responsibility to help deliver the greatest amount of good we can, in this time of incredible difficulty for many companies.

“What everyone is conscious of is that some businesses will fail and lives will be lost. It does not get more serious than that.”

Although the current priority for many companies is understandably liquidity, Bunker said asset finance under the scheme was also ongoing.

“We are talking to customers, listening to their issues and putting together loans for asset purchases,” he explained.

“People are going ahead with investments that are going to progress their businesses. We’ve got to remember there will be a surge of activity when this is over, and CBILS is an improved facility for people that can still manage to invest.”

The Compass Business Finance team can be contacted via email on info@compassbusinessfinance.co.uk

Separately, the Bank of England’s Covid Corporate Financing Facility provides a lending facility for larger firms. This involves short-term corporate debt – known as commercial paper – and is described as “a quick and cost-effective way to raise working capital for companies who are fundamentally strong but are experiencing severe disruption to cashflows”. It is aimed at helping larger businesses across a range of sectors.