The impact of CBILS 11 months on

Chris Treadwell is relationship manager at Avamore


It seems scary to think that we are approaching a year since the pandemic broke out and the UK was issued its ‘stay at home’ orders.

In the days after the first official UK lockdown, we saw Rishi Sunak introducing a swathe of seemingly heroic economic policies to help support businesses worst hit by the pandemic. The introduction of furlough was a huge support system to tackle mass unemployment, and we saw the emergence of the Coronavirus Business Interruption Loan Scheme (CBILS) to provide additional help to small businesses losing revenue and seeing cash-flow disrupted as a result of the global pandemic.

The government’s quick response was impressive, and so was the level of support the new economic programmes were set to provide. CBILS gave lenders the ability to deploy capital to the markets with a government backed guarantee (providing confidence on repayment) and borrowers were given the freedom to take a loan to support their operations without having to pay the first 12 months interest. On the face of it, CBILS seemed like a win all round and, unsurprisingly, the specialist finance markets saw high demand for the product from developers facing disruption.

In the months after March, we saw funders in the bridging and development space become accredited by the British Business Bank and introduce the CBILS product, which no doubt took business away from those sticking to lending their traditional range. Initially, there was a big buzz around the prospect and, unsurprisingly, an underlying feeling of nervousness from those not participating. Business was already going to face a huge hit due to the pandemic, and it was difficult to determine how much worse it would be to not join the relief programme.

Up to 18 October 2020, almost seven months after the scheme had started, it was reported that 73,000 businesses had received £1.7bn from CBILS, and so it was obviously having a huge impact in all industries.

11 months on and we’ve now had a true picture of the programme. Whilst the government deserves recognition for its fast thinking and quick action it has become clear that although CBILS is an attractive proposition, it is not an easy one to get hold of. Naturally, any initiative which appears to deploy ‘free money’ to businesses across the UK is going to come with hoops to jump through, red tape to work around and generally a lengthy process.

As time has gone on, the logistics of CBILS have not been reflective of the way our industry operates; importantly, developers generally do not have the luxury of time. Some can afford to wait, however the nature of even looking in the specialist finance markets means that you want something that is quick, flexible and suits your scenario.

More recently, we’ve seen confirmation of that as there has been an increasing amount of fallout from failed CBILS applications. As we head towards the cut off deadline before 31 March, it is safe to assume that there is a rush on final submission attempts. That means small businesses across all industries are fighting for the last opportunity for government financial support and so, it’s unsurprising that some developers simply cannot wait or are abandoning their original plans in favour of a more secure option with greater certainty of funding.

Once the relief officially draws to a close, I think we’ll see an increase in enquiry levels across the board. What’s more, some of those developers that did think they could hang on but don’t quite make the cut are likely to be at a difficult stage in their project. It could be that they’ve now faced cost overruns or, that CIBLS was their refinance option because they’d run over term with their existing facility. This means that along with increased demand for standard bridging and development products, developers will become increasingly dependent on lenders to provide them supportive solutions.

It’s at this point that we can really demonstrate the value of working with specialist finance markets. It might not offer cheaper or even ‘free’ solutions but products like Avamore’s Finish & Exit exist to address the demands of developers right now.

We are a market that will constantly innovate and adapt for its developers. That is the freedom we have in the non-regulated space and sometimes, you cannot put a price on getting exactly what you need, when you need it.


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