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South West accountants say businesses should look again at Government loan scheme following reforms

South West-based Milsted Langdon has said that businesses should look again at the Coronavirus Business Interruption Loans Scheme (CBILS) following changes to the scheme.

The CBILS scheme is designed to give SME businesses with turnovers of up to £45 million access to loans of between £1,000 and £5 million, backed by an 80 per cent guarantee from the Government.

Previously, the scheme was only open to businesses that were unable to obtain finance on normal commercial terms. However, the Government has now said that all otherwise viable businesses that have been affected by the crisis and which need funds to continue trading should be considered.

At the same time, the Government has confirmed that lenders should not require personal guarantees from directors for loans of less than £250,000.

For loans of between £250,000 and £5 million, they may require such guarantees, although they cannot include a main residence. If the business defaults on the loan, the bank can only seek to recover 20 per cent of the outstanding balance after business assets have been sold.

Jon Stocker, General Practice Partner at Milsted Langdon, said: “This is welcome news for many small businesses that would otherwise have slipped through the net because they qualified for loans on commercial terms.

“I hope that the new rules mean that every SME that needs funds to continue trading during the crisis will be able to access them.

“Importantly, the British Business Bank, which oversees the scheme, has said that businesses which were previously turned down because they would qualify for a loan on normal commercial terms should re-apply.

“Because CBILS is interest-free for 12 months, it may also be an option for businesses to consider while they wait for Government grants to come through, such as if they are waiting for a payment from the Coronavirus Jobs Retention Scheme.

“Businesses looking to apply for CBILS facilities should speak to their usual lender, making sure they have documentation ready, including historic accounts, cash-flow forecasts and business plans.”

Milsted Langdon is advising a wide range of businesses in and around South West on making the best use of the support on offer during the coronavirus crisis.

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