The decision in December 2020 to extend the UK Government-backed CLBILS (Coronavirus Large Business Interruption Loan Scheme) until 31 March 2021 offers a further lifeline to businesses continuing to reel from the impact of the pandemic last year.

The CLBILS launched in April 2020 and helped hundreds of qualifying businesses over the course of last year, to the tune of nearly £5bn across 675 approved facilities as at 13 December 2020. However, with over 1,000 applications submitted in that period (and many borrowers not reaching the application stage) it’s clear that not all companies have been able to harness this support, which provides finance of up to £200m through British Business Bank accredited lenders and partners. Those unsuccessful have taken alternative approaches to secure funding or restructure debt, for example, by raising capital from existing sponsors, taking expensive debt or, in many cases, completing CVAs.

Ongoing restrictions in the UK have increased the pressure on businesses across many industries, notably travel, hospitality and leisure and high street retail groups. The need for additional capital - and fast - is growing, while other lending sources may be displaying a reduced appetite for further investment given the continued uncertainty around timings for a genuine kick-start to economic recovery as control of virus transmission and significant progress in vaccination rollouts edges forward.

As a result, borrowers are returning to the option of the CLBILS, with the 31 March 2021 deadline for applications fast approaching. Additional CLBILS flexibility during business assessment was added in September 2020, which should also give large businesses additional impetus to re-consider the final call for this funding route in spite of insurmountable obstacles they may have faced last year.

It should also be noted that the scheme does not preclude private equity-backed businesses from applying for support, although this scenario does present additional challenges and the British Business Bank’s appetite for CLBILS funding with PE-backed businesses hasn’t been tested extensively following the second lockdown.

Despite various relaxations of qualifying criteria and significant increases to the potential funding available, the complex nature of CLBILS application and assessment may still feel like an arduous barrier to overcome.

Having advised borrowers through multiple applications, we know that careful preparation for the process is crucial.

While the first port of call should be with a company’s incumbent lender (if accredited), banks will selectively consider taking on new relationships. Accredited lenders will focus on a number of key metrics including the ability to outline longer-term business viability, existing capital structure, deferred working capital and a clear COVID-related funding need.

If all of these can be comprehensively articulated, the chances of a successful pursuit of CLBILS financing can be enhanced, leading to a more positive outlook for a company’s future.