No one can underestimate the impact of Coronavirus and how it has impacted every business and every individual. One thing is for sure and that is it will get much worse before it gets better, and there will be the need for a huge unprecedented package to protect businesses and individuals right across the board and soon!
This will also be a fast moving and ever-changing position as more support is provided and required.
We already have the Coronavirus Business Interruption Loan Scheme (CBILS) coming although we are still waiting for the final detail. This will temporarily replace the Enterprise Finance Scheme and be provided via The British Business Bank. What we do know is as follows:
- It will support a range of facilities including term loans, overdrafts, invoice finance and asset finance.
- Funding will be available from £1k to £5m and from 3 months to 6 years for term facilities.
- The lender (not the borrower) will be provided with an 80% government backed guarantee of the facility.
- To be eligible businesses must have a turnover of less than £45m, operate within an eligible sector (relatively few are excluded) and have a sound proposal to present, but may not have sufficient security to meet normal requirements. There will no doubt be some discussions around what a ‘sound’ proposition represents. I would assume this means a business that up until the outbreak of this virus was viable and needs the funding to see themselves through this period of uncertainty.
Unlike some of the previous crisis (albeit nothing on this scale) where some of the support did not get passed on or there was more talk than substance, it is clear this cannot be the case this time. It was good to see that the Chancellor met with all the heads of the banks prior to the launch of the initial measures. It did include the rather ineffective ‘doom and gloom’ Mark Carney as the Governor of the Bank of England but at least his successor is now in place.
Many funders, including all the high street banks, and many other funders including asset finance providers, are offering help and support including payment holidays, and many are being pro-active, and this is good to see. Again, there will no doubt be much more to come.
Whilst we expect there to be more measures and packages coming up almost daily, there are actions businesses can do and need to do in the meantime. Never has it been more important to remind everyone that CASH IS KING!
- Look at your cashflow and every constituent part of it.
- Critically review all the ins and the outs and manage what can be managed.
- Plot out at least the next 6 months cashflow based on different scenarios.
- Review your existing funding and speak to funders to find out what help is available.
- Understand what support is available and engage with professional support who may be able to support you through this process.
- Use any time where you are having to be isolated or home based to take a step back and critically review the business and strategy going forward.
If funding under the CBILS scheme is the most appropriate, then any accredited funder under the CBILS scheme will want to understand how much money you will need, based on some sensible assumptions, and will want to see cashflow forecasts to understand (a) how you have arrived at that requirement and (b) how realistic the assumptions are based on current thinking. The chances are you will need more than you think and for longer than you think you will need it, as we enter these unchartered territories.
As more support becomes available we will post it on our linkedin, twitter and facebook pages and of course we are available to discuss any specific requirements.