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What are CBILS and how do they compare to standard commercial loans?

The Coronavirus Business Interruption Loan Scheme (CBILS) was used by a huge number of companies to provide financial support to those who were losing revenue because of the Covid-19 outbreak. Nationally, 109,877 applications were approved for the CBILS, with a total value of £26.39 billion (HM Treasury).

However, when compared to a standard commercial loan, these loans are generally at far higher rates and shorter repayment terms resulting in massively higher payments. Most businesses will have returned to profitability post Covid-19 and may be concerned about how to manage this expensive debt.

If this sounds like something that relates to you, we have experience assisting clients refinance and consolidate debt after taking out a CBILS and other loans.

Client Case Study

A recent client of ours, a company director of a manufacturing company, had taken out three CBILS during the pandemic, with rates as high as 11.7 per cent. This had amounted to an outstanding balance of over £1.25 million by the end of 2021, on top of their existing mortgage loan of £1.3 million. They wanted to refinance the commercial premise, valued at £4.8 million, to then consolidate their existing borrowing, totaling £2.684 million at the time.

With experience advising clients with complex loans such as CBILS and access to specialist providers other brokers do not have access to, our broker delivered an effective solution. A loan of £3.1 million was arranged fixed for 5 years over a repayment term of 25 years. This released working capital and enabled monthly costs to reduce from £44,618 to £21,511 at the same time. The property was downvalued to £4.2 million, however, the lender was still able to assist due to the strength of the business and long track record of profitability.

What is the benefit of consolidating debt?

Consolidating debt into one loan allows you to take more control over your finances and make life easier. Debt consolidation through a mortgage can be a great option, however, there is no one size fits all solution to this loan type, and at times can be a complicated process without the right help.

If this is something that is relevant to you please feel free to make contact and we’ll see if we’re able to assist. Call us on 0800 980 8777 or email info@privatefinance.co.uk

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