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This week seven of the largest lenders to UK SMEs have written an open letter stating a key change to the CBILS application process:

“Following the changes to the scheme announced today lenders will only ask businesses for information and data they might reasonably be able to provide at speed and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability.

This means that business owners applying to these seven banks (Barclays Bank UK, Danske Bank, HSBC, Lloyds Bank, NatWest, Santander and Virgin Money) no longer need to prepare a cash flow and business plan when applying to CBILS. This dramatically reduces the efforts required to put an application together.

Despite it now being a simpler process to apply for CBILS financing, a business owner should consider if taking on debt at this time is the right thing to do.  To help make this decision preparing a forecast may be a very helpful tool to see how the cash position changes under different assumptions and scenarios.

This announcement appears to have arisen following a Prudential Regulatory Authority (PRA) announcement at the start of this week which requested lenders to consider the following in respect to CBILS:

“The performance of the business prior to the Covid-19 outbreak; a view of how the loan will be repaid in due course, relying on judgement in the absence of financial forecast information; and the general prospects for the sector in which the business operates once the effects of the pandemic have receded.”