UK SMEs use up Bounce Back Loans as CBILS deadline looms

Small businesses are running low on Bounce Back Loans, finds fintech business lender MarketFinance.

According to research, over 1.2m SMEs took a Bounce Back Loan to pay their suppliers and set up ecommerce and online shopping channels to attract new customers. However, the majority of those businesses now only have an average of £9,106 remaining which they expect to run out later this month.

30 September last day for applying for a loan under the Coronavirus Business Interruption Loan Scheme (CBILS), a deadline which many small businesses are unaware of. 

68% of those surveyed understand that they can refinance their Bounce Back Loans using this scheme. Only 6% have repaid their loans so far.

“The Bounce Back Loan Scheme (BBLS) was a good short term fix for SMEs. It provided the necessary support during the lockdown but looking ahead, the CBILS cash will provide the impetus to do more. Not having the cash flow to sustain businesses at the back end of the year, could be disastrous for many of these SMEs,” said Anil Stocker, CEO at MarketFinance.

With worries about the future and what lies ahead, 77% of SMEs believe that they will hit only 50% of their 2019 revenues and 56% anticipate that seasonal demand will be lower than last year due to the ongoing impact of Covid-19.

“Our customers range from small corner shops to high street retailers, when the lock down came we were heavily impacted as orders dried up and payments were delayed. Our £50k Bounce Back loan helped secure the business but as shops are reopening and need retail essentials, orders are picking up,” Ms Jo-Dee Loader, managing director of The Retail Factory said.

The company turned to MarketFinance to refinance with a CBILS loan, with a revolving credit facility of £250k for invoices to ensure that they have enough to meet the expected demand and growth over the next year. MarketFinance is one of the accredited lenders of the CBILS, alternative lenders can be found here.

“It’s essential that businesses start looking beyond simply survival and begin evaluating how they can adapt their business to these Covid conditions,” Stocker added. “Securing government-backed funding now, before the deadline, is an opportunity for businesses to access the working capital they need to build for the longer term.”