CBILS Refinancing: What To Do as Your Loan Matures

If your business took out a government-backed loan during the pandemic, its maturity date deserves a place on your funding agenda. The question is what happens next, and whether the facility you took out in 2020 or 2021 still meets the needs of your business today.

The original borrowing may have helped protect cash flow during an exceptional period. Since then, your business may have grown, taken on new commitments, changed its operating model or developed plans that require a different approach to funding. Your existing facility may still be suitable, but its terms and structure deserve a fresh assessment before you commit to another arrangement.

For businesses approaching the end of a Coronavirus Business Interruption Loan Scheme (CBILS) or Coronavirus Large Business Interruption Loan Scheme (CLBILS) facility, the maturity date is an opportunity to review the options available and plan the next stage of financing.

The earlier you begin, the more time you have to prepare the business, assess suitable lenders and make a considered decision.

CBILS and CLBILS maturity: what does it mean for your business?

Introduced in 2020, CBILS and CLBILS helped eligible UK businesses access finance during the disruption caused by COVID-19. CBILS focused on smaller businesses, while CLBILS supported larger businesses affected by the pandemic.

Under both schemes, the government provided a partial guarantee to participating lenders. The borrower remained responsible for repaying the debt in full. Both schemes are now closed to new applications. The British Business Bank's CBILS guidance confirms that CBILS closed on 31 March 2021.

Start with your facility agreement. The contractual maturity date, outstanding balance, repayment schedule and any subsequent amendments will determine what your business needs to prepare for. Facilities do not all mature on the same date, and an extension or renewal depends on agreement with the lender.

Once you have established the position, consider how the existing facility fits into your wider financial plans. You may need to replace the outstanding borrowing, preserve liquidity for working capital or arrange funding that supports a planned investment.

This review gives management a clearer basis for deciding what the next facility should achieve and how much flexibility the business needs from its funding arrangements.

Why refinancing deserves attention before maturity

Refinancing brings a new assessment of the business's financial position. Lenders will consider current trading performance, profitability, existing liabilities, forecasts and the company's ability to service the proposed debt. The terms available will depend on these factors, the structure of the facility and the lender's appetite for the transaction.

For a business that has grown since its original borrowing, refinancing may provide an opportunity to reassess the amount, repayment profile and structure of its debt. A business experiencing tighter margins or uneven cash flow may need to pay particular attention to affordability, repayment obligations and the flexibility of any new facility.

Timing affects the choices available to you. Beginning the process well ahead of maturity gives management time to prepare financial information, understand lender requirements and compare proposals. It also allows for additional questions, negotiations and documentation that may arise during the process.

The appropriate lead time depends on the size and complexity of the facility, the business's financial position and the number of lenders involved. A renewal with an existing lender may follow a different timetable from a refinancing involving several capital partners or a more complex security structure.

The important consideration is to establish a realistic timetable around your contractual maturity date, leaving enough room to assess alternatives before a decision becomes urgent.

Repay, renew or refinance: which route makes sense?

Businesses approaching maturity generally have three principal routes to consider. The right choice depends on the outstanding balance, available cash, the terms on offer and the business's future funding requirements.

Each route has different implications for the business. Repayment can reduce ongoing debt commitments, while a renewal may offer continuity. Refinancing can create an opportunity to reassess the funding structure and consider whether another lender or facility is more appropriate.

Evaluate the full cost and structure of the debt. Interest rates are one part of the decision. Repayment schedules, fees, covenants and security requirements can materially affect the overall value of a proposal. The objective is to find a structure that the business can service while retaining sufficient flexibility to operate and pursue its plans.

Your lender's renewal offer is a starting point

An offer from your existing lender provides a useful reference point, but it reflects that lender's assessment of your business and the terms on which it is prepared to continue providing finance. Comparing suitable alternatives can help management understand what else may be available.

The process begins with a clear view of the business's funding requirements. Is the priority to replace the outstanding balance, release working capital, fund expansion or support an acquisition? Each objective can lead to different lender requirements and financing structures.

An independent debt adviser can help identify appropriate capital partners, coordinate lender engagement and compare proposals against consistent criteria. Fuse Capital has 200+ direct lender relationships, providing a network through which its team can assess potential funding routes for suitable transactions.

The value lies in evaluating the complete proposal, including the implications for cash flow, security, covenants and future borrowing capacity. A competitive process can also give management a clearer basis for negotiating terms and deciding which option best fits the business.

Review your options before committing to a renewal. Speak to Fuse Capital about your refinancing requirements.

Could the Growth Guarantee Scheme support refinancing?

The Growth Guarantee Scheme (GGS), administered by the British Business Bank through accredited lenders, may be relevant for eligible businesses considering a new facility. The scheme is currently open for applications, according to the British Business Bank's official scheme guidance.

The Bank's Growth Guarantee Scheme FAQ confirms that GGS can be used in certain circumstances to refinance existing commercial debt, including eligible CBILS and CLBILS facilities.

Refinancing under GGS is treated as a new application. The business must meet the scheme's eligibility criteria and the participating lender's own requirements, including its assessment of affordability and viability. The Bank's guidance also explains that refinancing of eligible existing scheme facilities is subject to the applicable scheme conditions and minimum facility sizes.

GGS provides a partial government guarantee to the lender, while the business remains fully liable for repaying the facility. The guarantee does not remove the borrower's repayment obligations.

GGS is one route to investigate where appropriate. Management should assess its suitability alongside other available commercial funding options and consider the structure that best meets the business's requirements.

Preparing your business for refinancing

A well-prepared funding process begins with a clear understanding of the company's financial position and the purpose of the proposed borrowing. The following steps can help management organise the work ahead.

• Bring your financial information up to date. Prepare the latest accounts, management figures and relevant information on existing facilities. Consistent, current information helps lenders assess the business and identify any questions that need further attention.
• Build realistic cash flow forecasts. Forecasts should reflect expected trading performance, working capital requirements, debt repayments and planned investment. Consider alternative scenarios where trading conditions or costs could affect the business's ability to service the proposed facility.
• Review existing debt and security. Document outstanding balances, repayment schedules, covenants, guarantees and security arrangements. These commitments may affect the structure and execution of a refinancing.
• Define the purpose of the new funding. Establish whether the business needs to replace existing borrowing, preserve liquidity, finance growth or support a transaction. A clear objective helps determine which facilities and lenders are appropriate.
• Allow time for lender engagement and negotiation. Different lenders have different requirements, processes and credit criteria. A realistic timetable should account for information requests, due diligence, credit approval, documentation and completion.

These steps help management approach refinancing with a clearer understanding of its requirements and the factors that may influence the available terms.

How Fuse Capital can help

For management teams, refinancing involves coordinating financial preparation, lender engagement and negotiations while continuing to run the business. An independent adviser can help organise that process and bring greater structure to the evaluation of available options.

Fuse Capital is a global capital solutions advisory covering debt, M&A and restructuring. The firm has $1bn+ in completed transaction value, 250+ transactions completed, 1,500+ global capital partners and 13+ years in private markets.

Within its debt advisory work, Fuse Capital has £500m+ capital raised and 200+ direct lender relationships. This experience supports its work with businesses assessing funding requirements and exploring appropriate capital partners.

Fuse Capital is a capital solutions advisory. We do not lend or invest ourselves. We work alongside management teams on debt, M&A and restructuring, and we bring the right capital partners to the table for each.

The focus is on finding a funding structure that fits the business. That means considering pricing, repayment obligations, covenants, security and the flexibility needed to support future plans.

You can learn more about Fuse Capital's debt advisory services or explore its funding solutions for owner-managed businesses.

Treat your maturity date as a planning milestone

An approaching maturity date provides a reason to review whether your current borrowing still supports the business's financial position and ambitions. It also gives management an opportunity to consider how the next facility should be structured, what the business can afford and which capital partners may be suitable.

Start by establishing the maturity date, reviewing the outstanding balance and defining your funding requirements. From there, you can assess whether repayment, renewal or refinancing offers the most appropriate route for your business.

If your business has annual revenue above £4m, employs at least 30 people and is profitable, Fuse Capital can help you assess your refinancing requirements and explore suitable funding options.

Speak to Fuse Capital about your refinancing options.

Frequently asked questions

When do CBILS and CLBILS loans mature?

The maturity date depends on the individual facility agreement and any subsequent amendments. Businesses should check their original loan documentation and current repayment schedule to establish the exact date and the obligations that apply.

What happens when a CBILS or CLBILS loan matures?

The business must meet its contractual repayment obligations. Depending on its financial position and the lender's assessment, it may repay the outstanding balance, agree a renewal or extension with the existing lender, or refinance with another provider. Any new or extended facility requires the relevant lender's agreement.

How early should a business start planning for refinancing?

The appropriate lead time depends on the size and complexity of the facility, the business's financial position and the lenders involved. Starting well ahead of maturity gives management more time to prepare financial information, explore alternatives and assess proposals before a decision becomes urgent.

Can the Growth Guarantee Scheme be used to refinance a CBILS or CLBILS loan?

Yes, in certain circumstances. The British Business Bank's current GGS guidance permits refinancing of eligible existing commercial debt, including CBILS and CLBILS facilities, subject to the scheme's eligibility requirements and the lender's criteria. Refinancing is treated as a new application, and the business remains fully liable for repayment of the new facility.