Help for Property Development companies – CBILS Loans
Property development companies can use CBILS loans to refinance their businesses
The Coronavirus Business Interruption Loan Schemes (CBILS) can be a powerful and effective way for property development companies to deal with the disruption caused by the pandemic.
The timeframe of completing most development projects for such businesses will have likely been extended due to works being disrupted during the first lockdown, alongside challenges around procuring tools and materials.
However, despite this, existing commercial loans for projects are still payable, creating the risk of eroding margins from time delays alongside disruption to cash flow.
These challenges can be overcome by property development companies accessing CBILS loans, which have their lenders fees and interest covered by the Government for their first 12 months. This builds in flexibility by not having to make further finance payments for a full year, when things may return to normal should the rollout of the vaccine prove successful.
The application window for CBILS has recently been extended to 31 January 2021 so businesses still have a couple of months to apply.
Businesses need to meet the following eligibility criteria:
– UK based business activity
– Turnover no more than £45m
– Have a viable borrowing proposal
– Self-certify they have been impacted by coronavirus
– Not have been classed as a “business in difficulty”
Accessing CBILS loans
Finance of up to £5m can be sought from over 100 CBILs lenders, across a variety of products including asset finance, overdrafts, invoice finance and standard loans. These are listed on the British Business Bank’s website.
Loans under £250,000 will not require a personal guarantee, and to date (as at 18 October 2020), 73,094 businesses have access to CBILS loans, totalling a cumulative £17.16bn.
Companies who already have bounce back loans, can apply for CBILS but must settle their existing loan from the new facility.
Construction companies should be mindful of picking the most appropriate lender for their needs, as the interest rates on loans can be as high as 15%.
Businesses should engage with their accountants before applying for loans to help them pick the most suitable product, as well as giving their applications the best chance of being approved.