Business Loan FAQs
What is CWRT?
Coventry and Warwickshire Reinvestment Trust Ltd is a Community Development Finance Institution (CDFI) which was set up in 2004 to provide loans on a not-for-profit basis to businesses and social enterprises in the Coventry and Warwickshire area, and who cannot obtain finance from high street banks.
What kind of loans do you do?
Our maximum loan size is £75,000, and our maximum term is 60 months (5 years).
Our loans can be used for any business purpose, including buying capital equipment, paying running costs, and for working capital to help businesses cope with the timing gap between buying supplies and getting paid by customers. They can also be used to top up the difference between a loan from a bank and the amount you require.
Please note that we cannot replace any current finance arrangements e.g. to repay a credit card balance, pay off a business overdraft, or replace a finance arrangement on a van, unless finance is being withdrawn by your current lender.
What are the benefits of a CWRT loan?
Loan applications to CWRT are considered on their merits and not by a computerised scored credit rating system. You may be asked to attend our Credit Committee meeting so that you can discuss your business in detail – this gives you a chance to state your case, and explain any historic issues e.g. past County Court Judgements.
There are no early repayments penalties, so if your business does better than you expect (or you win the lottery!) you can repay some or the entire loan early without any exit fees.
The interest on our loans is calculated daily on the outstanding loan balance. This means that if you over-pay, you will incur less interest over the term of the loan.
Who is eligible for a Business Loan?
Any existing business primarily based within Coventry or Warwickshire can apply for a business loan, however we will consider those who are based outside of the area. You need to be at least 18 years of age at the time of application. You must have tried to obtain the funding you need from a bank or another source, but been declined in full or part.
What does the process involve in getting a loan?
Once registered, you wil be asked to provide a business plan, financials, previous accounts (if available), CV, credit report, bank statements and a completed application form. We will then arrange a meeting either face-to-face or via Skype to discuss everything before seeking approval from out Lending Group.
What are the timescales and deadlines involved in getting the loan?
This is dependent upon a number of factors not least the thoroughness of your application. Ensuring your application includes the supporting information requested for is very important as it cannot proceed without them.
In addition, the more detailed your supporting information: business plan; cash flow, etc, the better as it will help to demonstrate your understanding of the challenges and opportunities facing your business. If further information is requested this can often be considered by email rather than waiting for the next meeting.
Once your application is ready for submission to the Lending Group, it is then submitted for approval. You may be asked to present your application in person.
If you are offered and accept a loan you will be asked to come in and sign the loan agreement and any other documentation (e.g security). The registration of security usually taks a few days although it can be 4-6 weeks in exceptional circumstances.
We usually send money by BACS which takes 2-3 working days to clear (this can be to your bank account or direct to your supplier). We can usefast payment which is sent on the same day or the following morning.
What information does CWRT need to make an approval?
- Trading Figures – for existing businesses…accounts for the last 3 years or since the trading began plus up-to-date management information covering the period from the last year-end.
- Business Plan – an appropriate business plan
- Financial Forecasts – for the period of the loan (typically 2 or 3 years).
- CVs – a CV to accompany your business plan will help us to assess the skills, knowledge and experience you have
- Bank Statements – for the last 3 months.
- Evidence of Bank Decline – evidence that a bank or similar source has turned down the application for a loan (letter or email is accepted).
- A completed application form
- Personal Credit report – for each applicant
Templates can be provided.
Many businesses may qualify for free one-to-one support offered by the following organisations:
- Inclusive Enterpise Program visit their website for further details or call 07415 139807 or 07494 442869
- Creative Enterprise – visit their website for further information or call 024 7615 8300
- Growth Hub visit their website for further information or call 0300 060 3747
- Chamber of Commerce visit their website for futher information or call 02476 654321
- Nuneaton and Bedworth residents visit their website for futher information or call07415 139807 or 07494 442869
Why do you require a bank to decline me before I can apply?
The loan funds CWRT receives to lend to businesses is provided by the government and the EU. The funding we receive is conditional that we do not compete with mainstream finance providers, such as banks. Therefore you must try the banks first, who may offer you a better rate and additional services.
What bank statements do you require?
You need to provide us with the latest 3 months bank statements, which demonstrate your banked income and expenditure.
How much interest do you require?
Our interest rates vary according to the loan fund we are managing. They are between 9.25% and 18.25% dependent upon the level of the risk and available security.
What fees do you charge?
A fee is charged to contribute towards the staff time spent in preparing your application for consideration by the Credit Committee. If you are not successful in getting a loan, this fee is not charged.
If you request funds to be sent to you by the same-day fast payment service, we will pass on the banking charge incurred.
Any fees charged can be added to the amount borrowed.
What are your repayment terms?
Our repayment terms are very flexible, including:
- Capital and interest repaid monthly (usual terms)
- Interest only repaid monthly, with a one-off capital repayment at the end of the contract
- Payment holidays or deferred repayments should the need arise
- No penalties for early repayment of the loan
Do I need to offer security to get a business loan?
Every applicaton is assessed on its own merit. Larger amounts are more likely to require security and the interest rate is reduced when it is taken.
You need to consider what you are able to offer, and list anything available on your application form.
Types of security we take include Personal Guarantees (from the borrower or a third party), charges over business assets (such as machinery, vehicles or property), and charges over personal property. Some of these require bespoke legal paperwork to be drawn up, and any solicitor’s charges will be passed on to you in the form of fees.
Will a poor credit history prevent me from getting a loan?
Not necessarily. CWRT takes into account your credit history. If you are honest and declare all the details and if we believe the issue is in the past and will not reoccur again, we will still consider lending to you.
I have previously been declared bankrupt, can I still apply?
Yes, but it depends on when you were discharged and the nature of the bankruptcy, please give us a call.
Do you require different information to that I used when applying to the bank?
If you made a formal application to your bank then it is likely the information you presented to the bank – such as a business plan and a cash flow forecast – will be similar. However if you made an informal application which the bank declined then you should ask for an email as confirmation.
Who decides if my application is successful or not?
This is a two-stage process. At CWRT, we consider each case thoroughly.
First, on receipt of your enquiry or application our commercial loan team will review the application and additional information, which together with at least one meeting (on-site if appropriate) enables them to assess its merits and risks. If they deem it viable they will then prepare it to be submitted to the Lending Group.
Second, the Lending Group will then review the application. In some cases we offer the applicant the opportunity to present their application in person: because of its complexity; your credit history; or because of the size of the loan being requested.
Does CWRT require information after I take the loan?
Yes. Our funders require us to report back to them on how borrowers businesses are going. As its taxpayer’s money being used our funders need proof that the tax payer is getting value for money. The more positive evidence we are able to report to them the better the chance we have of securing similar funding in the future to lend to local businesses.
Currently, we are required to check regularly on your turnover and the people you are employing. We will usually give you a quick call during which we fill out a brief form, which we send out to you to return.
How can I improve the chance of my application being successful?
Here are some tips to help improve your application to CWRT. They apply equally to applications to other providers of loan finance.
- Explain clearly and simply why you want a loan and how it will benefit your business.
- Evidence your desire and ability to repay the loan.
- Demonstrate your understanding of your market, experience, skills and ability – prove that you have a good track record, both personally and in business behind you.
- Show that your proposition is realistic – and that you are applying for an appropriate amount (too little is as bad as too much).
- Show enthusiasm and belief in your product or service.
- Treat your lender as a potential business partner – be willing to communicate, work together to find appropriate solutions and be open to advice.
- Understand your own forecasts
- Ensure all the information that is requested is provided quickly, this gives confidence to any lender
What other organisations can help me?
There are a number of organisations that can help businesses. Often free, these organisations offer services both to help to apply for a CWRT loan or to help your business grow.
The Coventry & Warwickshire Growth Hub is your single gateway to navigating the best private and public sector business support available. They are your foot in the door, your insider knowledge, your expert resource.