Almost half of those who applied for a Coronavirus Business Interruption Loan (CBILS) loan have been declined, according to research from MarketFinance.
Only 43% of businesses that applied for a CBILS loan were successful in securing it. The typical loan taken by these businesses was £211,667, though they applied for almost double this amount.
Additionally, 90% of businesses are waiting to be paid for work done pre-lockdown, with firms owed £148,917 on average.
As a result, the vast majority of businesses (81%) are also expecting to wait longer to be paid for the goods they provide and work they do from now on. Half anticipate waiting anywhere between 14-30 days beyond normal terms (45 days). Whilst 15% reported they could be waiting anywhere between 3-6 months longer to be paid for work.
85% of business owners reported feeling a sense of loss of control over the past three months.
Anil Stocker, CEO at MarketFinance, commented: “The reopening of the UK’s high streets marked the first buoyant moment for UK businesses in months but it might well be the calm before the storm.
“Businesses are facing a three-pronged assault on their finances. First up, it’s alarming that only half of their CBILS loans are being granted, then we learn that they have close to £150k in outstanding payments since the lockdown began and now, it’s likely that they will have to wait twice as long to get paid for new work they do whilst demand and economic activity normalises. This coupled with a very moderate outlook for trading conditions, ‘rent quarter day’ this week and uncertainty about their workforce, no doubt this will put further pressure on businesses.
“Given the continuing uncertainty around how the country returns to ‘business as usual’, I would urge business owners to look beyond their banks and seek advice as soon as from other lenders, business advisors and mentors. The earlier they do this, the wider the range of potential solutions they’ll have open to them.”
Source: Commercial Reporter, June 24 2020.