CBILS Forecast - Alterledger

Why you need a Coronavirus Business Interruption Loan Scheme / CBILS Forecast.

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller businesses (SMEs) across the UK. The businesses under consideration are those that are losing revenue and seeing their cash flow disrupted as a result of the COVID-19 outbreak. The scheme is a part of a wider package of government support for UK businesses and employees. Other measures in the support package include the small business grants and and the self-employed income support. If you are thinking of applying for a loan from the British Business Bank, you will need a CBILS forecast.

How do I apply for a Coronavirus Business Interruption Loan / CBILS?

You will need to find a lender and approach them directly – preferably from the lender’s own website. A list of accredited lenders is available on the British Business Bank website. The list includes the main high street banks in addition to other loan providers.

It is not widely known, but the British Business Bank is making it clear that you can only apply to the CBILS if every other government relief package has been taken. So you need to account for any of the following that you can claim VAT deferment, Time to Pay for other taxes and the Coronavirus Job Retention Scheme / furloughed workers etc.

What do I need in my CBILS forecast?

You will need to provide certain evidence to show that you can afford to repay the loan.

This is likely to include:

Management accounts
Cash flow forecast
Business plan
Historic accounts
Details of assets

All applications should include a 3 year forecast for Profit & Loss (P&L), Balance Sheet and Cash Flow. These measures must appear in the CBILS forecast to give yourself the best chance of approval. Banks will only lend to businesses they consider to be viable.

How can I create a CBILS forecast?

You will need a forecast that combines the Profit & Loss, Balance Sheet and Cash Flow. Where these three financial statements link to each other it is known as a three-way forecast.

Spreadsheets

It is possible to generate a forecast in excel, but working out loan repayments and cash flow timing is difficult using spreadsheets. This method is prone to errors and spreadsheets have a habit of breaking as more factors are added to your forecasting model.

Futrli

Futrli is a forecasting app that links to Xero and other online software systems. You can create scenarios in Futrli and compare them to each other and actual data in your dashboards and printed reports. It seamlessly auto-updates the P&Ls, Balance Sheets and Cash flows in every scenario as new data is created in your accounts package.

Everything that is required by the underwriters of the relevant banks can be created in Futrli.

Spotlight reporting

Great budgeting and cash flow forecasting can mean the difference between business success and failure. Spotlight is an ‘all-in-one’ budget creator, three-way forecasting and scenario builder. Spotlight also links to Xero and other online systems to allow a direct link to actual data.

Easily import your Budget data or start from scratch
Full 3-way forecasting with flexible rules and great outputs ideal for the Bank and Board
Add loan amortisation and dynamic rules for a more timely and accurate client forecast
Plot and plan for the future by selecting or creating ‘what if?’ scenarios
Use drivers as the building blocks to forecast revenue, costs and the success of the business.

Will I be able to create a CBILS forecast on my own?

Forecasting is more of an art than a science, but it requires a thorough understanding of accounting principles as a starting point. If any of us had been able to forecast the current situation, we could have averted it. Only you will know how your own business works, but translating this into a CBILS forecast that your bank will understand is far from straightforward.

Will I need security to get a CBILS-backed loan?

Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

they exclude the Principal Private Residence (PPR), and
recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

A borrower’s/guarantor’s Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL-backed facility.

How can I get help with my CBILS forecast?

A management accountant can help you with your CBILS forecast. Management accountants are trained to focus on the business and future rather than just historic information. You can’t forecast the future without understanding the past so a Chartered Management Accountant will first look at your existing accounting records to understand your business.

After completing a full analysis of your historic transactions, your management accountant will be able to build a financial model for your forecast using software as described above. The best way to manage this process is to ensure that all your accounting records and forecast are stored in cloud software. With the constraints of the COVID-19 emergency the need has never been greater to have all your records available online to facilitate remote working.

Alterledger is experienced with Futrli and Spotlight reporting. To get more information, please get in touch using the contact form on the Alterledger website.