CBILS - It Needs some rework

Coronavirus Business Interruption Loan Scheme (CBILS)

So firstly, this post isn't designed to be a moan about the government or the banks. What I'd like to do is get thoughts and ideas on what COULD be done to make the CBILS process more efficient and how it could help all business sectors.

As you'll see from the infographic, only 0.2% of the total available funds have actually been deployed and made it into businesses hands. That's ￡800m, which to most is a lot of money, but to put into context (according to BBC's The Apprentice) Lord Sugar's personal net worth is more than that, so he could have single handedly bailed out the whole economy and expected to get his money back with interest over time...!

The largest hurdle that I see is that, as these are loans, the banks need to go through a process to make sure the businesses are viable before they can lend. I.e. if they wouldn't have lent to them before the COVID-19 pandemic, they probably wouldn't now. This is particularly common when it comes to any businesses that have opted for a growth strategy rather than profit. By this I mean any business that has taken investment on board in an attempt to accelerate and scale their business ahead of profitability.

As a co-owner of a number of tech startups, I thought I'd look at the Barclays CBILS eligibility checker - https://www.barclays.co.uk/business-banking/borrow/coronavirus-business-interruption-loan/#checkeligibility which was eye opening.

Q1: Have you experienced a loss in trading or any impact on business performance as a consequence of coronavirus?

Yes - of course, most businesses have.

Q2: Can you prove that your business would've been able to afford this lending before the coronavirus outbreak (for example, with your financial accounts)?

Ah, as tech startups, most are pre-filing for their first set of accounts to companies house, and are currently burning investment money. So NO

Barclays response:

Hmmmmm, but we weren't in financial difficulty before (and we're not now - yet - as a note), but the way the banks assess loan/debt viability really doesn't work for businesses in growth mode. They need some form of Venture Cash!

I've seen various ideas, but I thought I'd see what my network suggests and things would be good ways of extending the CBILS scheme sensibly:

For Growth Companies:

Incentivise private investors to release cash into companies quickly:

Increase the SEIS benefit to 100% for this tax year

Increase the EIS benefit to 75% for this tax year

Government Backed Loans/Grants as Convertible Loan Notes - with the government effectively buying equity in British businesses.

What else does everyone else have? Please leave your comments below... you never know, they might make it to the treasury.