Using CBILS for franchised & franchise businesses

CBILS for franchised & franchise businesses The Coronavirus business interruption loan scheme is pretty well known. It seems to have been extended more times than the last video I hired from Blockbuster in 1997. Like Blockbuster, the end is nigh for the scheme as it currently stands and a further extension looks unlikely, with that […]

December 29th, 2020

CBILS for franchised & franchise businesses

The Coronavirus business interruption loan scheme is pretty well known. It seems to have been extended more times than the last video I hired from Blockbuster in 1997.

Like Blockbuster, the end is nigh for the scheme as it currently stands and a further extension looks unlikely, with that in mind the end date looks pretty certain to be 31st March 2021.

The question is, what does that mean for franchise businesses?

In short, it is a one off chance to do one of a few things that may make 2021 and beyond a very successful period. Let’s remember that the CBIL scheme allows for businesses to borrow up to 25% of current turnover. Loans up to £250k are exempt from needing a personal guarantee.

This means that for any franchise planning to expand, or where a refurb is coming due then now is the time to finance those plans, don’t wait until these events fall due as the scheme may not be around and financing will come with more analysis and more personal risk
Many franchises carry debt, whether that be early start turnkey costs, expansion or growth they are committed to. This borrowing is likely to be supported by a charge over property or a personal guarantee. This borrowing could be refinanced using CBILS and those supporting pieces of security removed
For franchisors, they may have plans to help their franchisees expand. There is a unique opportunity to help their franchisees do this by using the CBIL scheme. Whilst the need for raising finance may not be immediate, there are benefits to using the CBIL scheme while it is around ahead of when the cash may be needed. Remember that there will be no payments to be made for 12 months so cashflow isn’t impacted

To help we have produced a short overview pdf document which can be shared and used as required.

The Franchise CBILS benefits

The message is simple, there is a limited time opportunity to use a great loan scheme. Let’s not forget the benefits;

Loans up to £250k are exempt from requiring any form of personal guarantee
The Government pay the first year interest and loan arrangement fees for you
You can borrow up to 25% of 2019, or 2020, turnover whichever works best for you
You can have as many CBILS loans as you want from as many lenders as you want, subject to remaining within the overall scheme limits
You can borrow from any CBILS lender, not just your bank

Download the CBILS for franchise businesses guide here.

For any questions or queries with how this scheme could benefit your business then get in touch.

By Dave Farmer

Franchising & CBILS

David Farmer

Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.