{"id":6696,"date":"2020-11-30T08:13:05","date_gmt":"2020-11-30T08:13:05","guid":{"rendered":"https:\/\/kredx.com\/blog\/?p=6696"},"modified":"2023-10-26T05:52:06","modified_gmt":"2023-10-26T05:52:06","slug":"smes-running-on-empty-as-cbils-deadline-looms","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/smes-running-on-empty-as-cbils-deadline-looms\/","title":{"rendered":"SMEs Running On Empty As CBILS Deadline Looms"},"content":{"rendered":"<p><iframe src=\"https:\/\/w.soundcloud.com\/player\/?url=https%3A\/\/api.soundcloud.com\/tracks\/938555764%3Fsecret_token%3Ds-kOdnRnEoDGF&amp;color=%23ff5500&amp;inverse=false&amp;auto_play=true&amp;show_user=true\" width=\"100%\" height=\"20\" frameborder=\"no\" scrolling=\"no\"><\/iframe><span style=\"font-weight: 400;\">The Covid-19 pandemic has shaken the world economy to its core, with business sectors of most countries bearing the brunt of this turmoil. It is a known fact that when compared to large companies,<\/span><b> SMEs<\/b><span style=\"font-weight: 400;\"> tend to find it more challenging to cope with a financial crisis, arising in the form of capital shortage.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To survive the phase of lockdowns and general economic slowdown, CBILS were introduced to extend<\/span><b> loans<\/b><span style=\"font-weight: 400;\"> to <a href=\"https:\/\/www.kredx.com\/msme-loan\/\">small and medium business enterprises<\/a>. You must note that such support is available to companies which are otherwise capable of lending products but may fail to avail the security required for approval.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, this initiative ended at midnight of 30 September 2020, leaving many<\/span><b> SMEs<\/b><span style=\"font-weight: 400;\"> with no access to any contingency sources of business funding.\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">In case you are not aware of CBILS, read on to find more!<\/span><\/i><\/p>\n<h2><b>What Is CBILS?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Coronavirus Business Interruption Loan Scheme or CBILS is a government scheme launched to help <\/span><b>SMEs <\/b><span style=\"font-weight: 400;\">in the UK, whose cash flow was hampered during the Covid-19 outbreak. Typically, businesses with viable operation plans were eligible to avail of this scheme.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Enterprises are entitled to avail CBILS in the form of \u2013<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Overdrafts \u2013 Businesses can avail this facility for 3 years<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Invoice finance \u2013 Enterprises can utilise it for 3 years<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Business loans<\/b><span style=\"font-weight: 400;\"> \u2013 They can be obtained for a term of 6 years<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Asset finance \u2013 Extended for a tenure of 6 years\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The government is liable to cover the interest and arrangement fee accompanying CBILS for the first 12 months. Enterprises do not have to forward a guarantee fee to use this scheme. Further, there is no personal guarantee required to avail credits under \u00a3250,000.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You should also know that the <\/span><b>loans<\/b><span style=\"font-weight: 400;\"> extended by CBILS attract a commercial rate of interest.<\/span><\/p>\n<h2><b>Uses Of CBILS<\/b><\/h2>\n<p><b>SMEs<\/b><span style=\"font-weight: 400;\"> can use CBILS in the ways mentioned below \u2013<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">To manage cash flow<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Keep a steady working capital inflow<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Purchasing or leasing property<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Developing a project<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Expansion of business<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">For start-up ventures<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Research and development<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">You must note that users may face certain restrictions that are based on CBILS providers\u2019 discretion. Consequently, <\/span><b>SMEs <\/b><span style=\"font-weight: 400;\">are encouraged to find out about the same from their lender.\u00a0<\/span><\/p>\n<h2><b>How Are Indian Enterprises Faring?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The pandemic has also impacted the growth and stability of SMEs in India, making them more susceptible to a cash flow crisis. Invoices are remaining unpaid over substantial periods, leading to disruptions in working capital flow.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">More Indian entrepreneurs are turning to avail <\/span><a href=\"https:\/\/www.kredx.com\/business-loan\/\"><b>business loans<\/b><\/a><span style=\"font-weight: 400;\">, to tide over this period of uncertainty.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, amidst this pandemic, lenders are quite cautious about extending finances and managing the risks of default. As a result, you may have to go through a stringent verification process to get your <\/span><b>loans <\/b><span style=\"font-weight: 400;\">approved<\/span><b>.<\/b><\/p>\n<p><span style=\"font-weight: 400;\">In such a situation, it only makes sense to leverage your unpaid invoices and opt for alternative financing options like <a href=\"https:\/\/www.kredx.com\/working-capital\/invoice-discounting\">invoice discounting<\/a>. Avenues like <\/span><b>supply chain<\/b><span style=\"font-weight: 400;\"> financing or <a href=\"https:\/\/www.kredx.com\/growth-capital\/lease-rental-discounting\">lease rental discounting<\/a> can also be extremely helpful for businesses to access capital that remains tied up in leases and rentals.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can avail the cash flow solutions offered by leading fintech companies like KredX, and enjoy instant access to cash within 24 hours &#8211; 72 hours*. You can use invoice discounting facility to make the most of your accounts receivables and also meet your <a href=\"https:\/\/www.kredx.com\/what-is-working-capital\/\">working capital<\/a> needs accordingly.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Due to the non-involvement of any third-party, your customers will be kept out of the loop about such arrangements. Invoice financing is one of the most viable options, when it comes to SMEs, keeping their operations afloat in due course of this pandemic.<\/span><\/p>\n<h3><b>Bottom Line<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">CBILS is a useful means of accessing funds to boost the cash flow of <\/span><b>SMEs<\/b><span style=\"font-weight: 400;\">. However, its initial phase concluded on 30 September 2020, and businesses may need to seek other financing options to manage their cash flow crisis. For Indian SMEs, invoice financing can be an effective substitute to avail funds during this situation of economic turmoil.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Covid-19 pandemic has shaken the world economy to its core, with business sectors of most countries bearing the brunt of this turmoil. It is a known fact that when compared to large companies, SMEs tend to find it more challenging to cope with a financial crisis, arising in the form of capital shortage. To [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":6697,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[1207,52,1208,37,435,1209,58,79,536,38],"class_list":["post-6696","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-asset-finance","tag-business-loans","tag-cbils","tag-invoice-discounting","tag-invoice-finance","tag-lease-rental-discounting","tag-loans","tag-smes","tag-supply-chain-finance","tag-working-capital"],"_links":{"self":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/comments?post=6696"}],"version-history":[{"count":1,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6696\/revisions"}],"predecessor-version":[{"id":13695,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6696\/revisions\/13695"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media\/6697"}],"wp:attachment":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media?parent=6696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/categories?post=6696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/tags?post=6696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}