CBILs funding – Challenger Banks & Non-Bank lenders to ease pressure?

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This week the government approved the addition of 4 challenger banks to the emergency coronavirus lending scheme; Starling, Cynergy Bank, Oak North and The Co-operative Bank.

With circa 300,000 applications thus far and just 4200 businesses securing funding, the challenger banks will be a welcome addition as lenders struggle to meet the incredible demand for finance from SMEs.

To date, the scheme has faced criticism due to the delays in getting funds to businesses and the strict lending criteria in place. The quartet of challenger banks will hopefully be joined by non-bank lenders such as Iwoca, Funding Circle, Market Finance and Fleximize in the coming weeks. This could be key in quickly funding businesses as fintech non-bank lenders are often much faster at processing and approving applications than high street banks due to advanced systems and platforms.

One high street bank who should be commended on their support and funding for SMEs is Royal Bank of Scotland who to date have approved a hugely impressive 70% of the loans handed out to businesses under the CBILs scheme. That equates to 2500 RBS loans and significantly, they are currently the only major high street bank offering CBILs loans under £25k.

Many of the SMEs we have spoken to at The Business Board have reported a number of high street banks requiring them to borrow a minimum of £25k, although HSBC are reported to be one of the banks working on reducing the size of loans available to sole traders and no doubt others will follow suit.

Under normal circumstances we would always first recommend a conversation with your high street bank when looking to secure funding for your business. This is still the case, although you may find a much longer wait in the call queue and a few more hoops to jump through before funding is approved. The better interest rates offered by the high street banks often don’t come easily. The non-bank funding route is an effective alternative to ensure your business secures the finance it needs quickly, although the pay-off of course is often a higher interest rate.

We’re continuing to speak with our network of funders, from the high street to challengers to non-bank lenders, in order to ensure we can offer the most up to date advice and best rates available to our clients. As the situation changes and more lenders are approved for the CBILS scheme we will of course keep you updated.

If you would like to discuss finance options for your business, or you would like further information on the CBILs scheme and how you can apply for it, email us at: info@thebusinessboard.co.uk or call our office on 0118 338 1818.

We look forward to speaking with you and of course, stay safe.

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