What options are available to refinance your CBILs loan?
The Coronavirus Business Interruption Scheme (CBILS) and Bounce Back Loan Scheme (BBL) were introduced as mechanisms to help businesses through the Covid-19 outbreak. If you are reading this then you most likely want to know what your CBILS refinance options are?
Initially the schemes were provided on a 12 month payment and interest holiday which for many businesses is now coming to an end.
So what are the options for your Business?
Bounce Back Loan refinance Options
There are many options available under the “Pay as You Grow” scheme which was introduced to help businesses repay once the first 12 months had passed.
The options available under this scheme are as follows:
- Request an extension of the loan term to 10 years from six years, at the same fixed interest rate of 2.5%
- Reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan
- Take a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan.
We would not recommend refinancing the BBL. Nothing on the market can come close to the PAYG options.
CBILS Refinance Options
Unfortunately the “Pay As You Grow” scheme was not introduced for CBILS borrowers and therefore looking at more traditional options to help with repayment are required.
CBILS interest rates varied, however, the maximum interest rate provided was 15%. It may be possible to look at refinancing your CBIL loan onto a lower rate Business Loan, whilst the same time extending the term. This not only reduces the monthly repayment but could save the business £000’s over the years. The issue with refinancing this way is that the business would lose the government guarantee.
Interest Only Loans
A number of lenders are now offering interest only loans for a 12 month period. Refinancing a CBILs loan onto a interest only loan will enable a period of 12 months to recover further before capital is due to be repaid.
Secured Business Loan
Nothing to pay for 12 months. If you would like a further 12 months of no payments then there is an option available. This is only available if a asset (eg property with equity) can be offered as support.
Depending on the value of your CBIL you could look to refinance and spread the loan over a longer period which will reduce the monthly outgoings. As mentioned above this would lose the government guarantee., however, the asset value should be sufficient to cover the amount of the loan required.
There are other financing options available to your business such as Invoice Finance, Merchant Finance and Revolving Credit facilities which would be used as a CBILs replacement.
If you want to speak with a funding specialist click below or call 0161 8211478 and we would be more than happy to assist.
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- Asset Based Lending
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