Coronavirus Business Interruption Loan Scheme: The devil is in the detail
By now everyone will be familiar with the Coronavirus Business Interruption Loan Scheme (CBILS) and will be busy fielding calls from clients seeking guidance. However, accountants should realise that the CBIL scheme is complex, was created at very short notice and has many traps for the unwary borrower.
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I can only imagine a large number of small businesses will go bust whilst the paperwork is being filled out. Many will not have up to date accounting information, if they're producing their accounts on an annual basis, and their accountants are already up to their eyeballs responding to this crisis with reduced staff numbers and fractured working conditions.
The amount of work involved in producing the information required looks to be huge and would normally be spread out over the course of a year. Cramming into a single month is not feasible, especially whilst we're expected to carry on producing VAT returns for payments that aren't due until next year.
I don't know about everyone else but so far I haven't seen a single penny in government support actually get to anyone and I have many clients who now have no money in the bank as their cash flow has completely ceased.
I am happy to confirm that most of my clients in the Allerdale and Copeland areas of Cumbria have received their grants already. So that's most of my clients. As far as I know, none of my clients outside of Cumbria - about 10 - has had a grant payment yet, so gold star for the Cumbrian ratings people.
Banks are proving to be dire even with high quality applications. Slow. Nothing approved yet. I accept they are snowed under but time is of the essence here. We're going to see very profitable businesses go to the wall over this. I have 143 clients, if this log jam does not resolve itself by May I think between 50 and 100 employees of profitable, solvent businesses could be getting redundancy notices in June. Because the alternative will be for my clients to put their houses on the line over this.
For the most vulnerable clients, they have perhaps been guilty of taking on debt and risk at the wrong part of the business cycle, despite my warnings on, for example, the likely hit to our economy that Brexit would entail. But that might have been say a 5% hit to GDP maximum, not the 35% hit we are actually looking forward to.
If you don't want to depend on loans, start your own loan company. A year ago, I would have told you that this is not realistic, but now I can say that in my case it was not difficult for me to find https://neo-fin.com/ and come up with a good platform for issuing loans and loans online, so I think you should also start looking for such solutions if you want to become financially independent.