MHA | CBILS has been a success for construction companies - but will…

CBILS has been a success for construction companies - but will the Recovery Loan Scheme share the same success?

Posted on: August 20th 2021 · read

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On 23 March 2020 last year business owners up and down the country breathed a collective sigh of relief behind their face masks as they confronted the uncertainty of going into a lockdown – it was the day that the Government launched the Coronavirus Business Interruption Loan Scheme (CBILS) scheme to support small and medium sized businesses.

The CBILS scheme was an undoubted success – it provided £6bn of support in its first application round and went on to total £26bn by its close at the end of June 2021.  In fact the final month saw a further rush for applications with £3bn being allocated in the last month as it came to a close.

Construction businesses fared well with 16% of all CBILS allocated to this sector which represents 17% of the number of businesses in the UK economy.  Real Estate owners did even better – grabbing 6% of CBILS funding whilst representing only 2% of UK businesses.

Around the country, every region got support with more allocated to London (19%) compared to its relative size of the SME economy (16%). Conversely businesses in the South East and South West were allocated marginally less than expected.  Overall the spread of money was wide and welcome.

On 6 April 2021 its replacement scheme, the Recovery Loan Scheme (RLS), was launched. RLS allows for up to £10m of funding and runs until 31 December 2021. So how has this scheme performed to date?

Surprisingly no-one knows as the data hasn’t been published yet…but early anecdotal evidence suggests it will not be as popular or as necessary as CBILS.

The Government announced the early successes on CBILS within 10 weeks of it being announced, but now four months on there is still no published data about RLS.

This may be due to the fact that CBILS was such a good scheme that almost 100 funding providers joining it…whereas to date there are only 59 accredited RLS funders.

The huge scale of the CBILS lending and the amount lent in the final month means that many prudent business owners have secured what monies they want early and are still using those funds.  Given that many CBILS loans don’t need to be repaid immediately and the Government covered the interest payments in the first twelve months this made sense.  Especially when compared to the RLS where business have to meet all the interest costs and arrangement fees.   

Whilst business confidence is growing as the economy rebounds – the latest ICAEW Chartered Accountants survey showed that government support and access to funding capital were not high on business owners agenda.  These two issues only ranked 10th and 11th in a list of 14 business challenges – far behind those of regulations, customer demand, staff shortages and transport problems.

For construction companies, if the shortages in the supply chain and the economic growth continue this will give extra demands on working capital, and some business owners will seek more funding.  It will only be the ones that are less prepared or are facing new and unexpected growth and challenges that will apply for RLS funding.

The RLS scheme is welcome even if it merely helps funders who indirectly benefit from government backed security against their loans and so in turn will give some support to UK Construction.  It will not prove to be as popular as CBILS and it will be very interesting to see the data when it is eventually published.

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If you would like further guidance or to discuss in more detail the impact of this change on your firm, please get in contact


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