The Government has confirmed one of the eligible purposes of The Coronavirus Business Interruption Loan Scheme (CBILS) is to fund the buying of businesses in the UK. This will provide a boost to M&A activity enabling businesses with turnovers of up to £45 million to make strategic acquisitions while benefiting from no upfront costs and lower initial repayments for their financing. In turn, sellers will be able to sell their businesses during a difficult period.
So, is now the time to make acquisitions or to sell your business?
The answer for some businesses is Yes.
One way to safeguard your business in difficult times and to ensure its future is to grow profitable revenue streams. Acquisitions of strategic targets can achieve this. Furthermore, this is a time when there may be real value in the market.
Sellers will also benefit. Fusion have been retained by a number of sellers and approached by and are aware of a number of acquirers who can offer finance (whether through CIBLS or not) to secure the future of prospective selling business; and where a seller’s business may be suffering some distress, the use of earnouts and other structures will allow sellers to benefit from future profits.
If you would like a confidential chat to discuss the options please let us know.
What is The Coronavirus Business Interruption Loan Scheme (CBILS)?
CIBLS is open to businesses with an annual turnover of up to £45 million facing cashflow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. The scheme went live on Monday 23 March and will initially run for six months. CIBLS is available through more than 40 accredited lenders across the UK.
It guarantees facilities up to a maximum of £5 million, available on repayment terms up to six years (for term loans and asset finance) and up to three years (for overdrafts and invoice finance facilities). The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility.
There is no guarantee fee to access the scheme. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. You will therefore benefit from no upfront costs and lower initial repayments.
To be eligible for a facility under CBILS, your business must:
- Be UK-based in its business activity
- Have an annual turnover of no more than £45 million
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
- Self-certify that it has been adversely impacted by the coronavirus (COVID-19).
Full details are available at the 100% Government owned, but independently managed British Business Bank website.
If you are interested in acquiring or selling a business get in touch with Fusion. We are ready to help.
In the UK Budget delivered today (March 11) Rishi Sunak, the Chancellor of the Exchequer, reduced the lifetime limit on entrepreneurs’ relief to £1 million.
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