Banks may have delivered most of the funds for the coronavirus business interruption loan scheme (CBILS) but they are not serving advisers well, business intermediaries have told ThinCats.
The alternative lender, which focuses on small- and medium-sized enterprises, was accredited to deliver CBILS in April and began delivering the loans for existing borrowers.
Last week it opened up applications to new customers as well.
Three quarters of professional corporate finance advisers, brokers and accountants found the banks’ CBILS processes challenging, 45 per cent believed the process was difficult and around a third thought it was very difficult.
Read more: The P2P CBILS rates on offer to borrowers
“Banks have been providing the vast majority of these loans but have been struggling to serve advisers satisfactorily,” ThinCats said in a blog on its website.
Advisers said that the most important factor for them when finding a lender for their clients is how long they take to decide whether to fund a business or not.
Advisers told ThinCats that private equity (PE) backed businesses should be included in CBILS. However, they are eligible, it’s just those with accumulated losses totalling more than half of their subscribed share capital that are not accepted.
“This can exclude some high-growth businesses, although it does not apply if the business is less than three years old,” ThinCats said in the blog.
“The accounting treatment of instruments such as loan notes in the calculation of share capital can also have an impact on whether a business is eligible. At ThinCats we have a specialist PE team who can advise on issues of eligibility.”
The lender highlighted that businesses should use financial advisers for CBILS applications.
This is because most firms apply to their existing bank without the use of an adviser and half of these applications are rejected, mostly because of the borrower providing incorrect or incomplete information.
Advisers said that most CBILS loans are between £100,000 to £500,000, with an average loan size of £195,000.
ThinCats said since extending applications to new borrowers, more advisers have asked the lender whether acquisitions are eligible for CBILS funding.
The alternative lender said that CBILS loans can be provided for acquisitions, except for management buyouts or management buy-ins.
ThinCats is also now seeing more businesses seeking CBILS for growth funding rather than survival.