As part of our Business Leaders series of webinars looking at the most pressing issues in light of the unique challenges posed by coronavirus COVID-19, on 29 April we hosted a webinar to answer some of your questions about liquidity, looking at the government support measures in place as well as how to access funding from alternative sources, and tips on how to approach your lender in these uncertain times.
Introduction
Coronaviris COVID-19 is a crisis unlike any other we have faced as a country which is having a significant impact on our businesses and the economy.
We have devised a series of webinars aimed at you, business leaders, to look at implications of the outbreak. In this webinar we looked at how UK businesses can help manage their liquidity. Below are our key tips and takeaways.
Take advantage of government support
The UK Government has unveiled a number of new support measures, to help businesses navigate this challenging time. In summary, these measures fall broadly into three categories:
Relief measures from current costs (intended to relieve immediate impact of CV)
- Small Business Grant Funding
- Grant funding for retail, hospitality and leisure businesses
- Coronavirus job retention scheme for employees
- Rates holidays and protection from eviction
New funding schemes (each backed with government support and suitable to different types of business)
- Future Fund
- Bounce back loan
- CBILS
- CLBILS
- Corporate Financing Facility
Redirection of existing support
- Redirecting of businesses to pre-existing forms of support such as the British Business Bank’s start up Loans Programme. Or UKEF export credit support
There are 52 accredited lenders through which businesses may apply for funding. These lenders are listed on the British Business Bank website.
For further details including eligibility, availability and instructions on how to access each of the different measures, please visit our coronavirus COVID-19 hub here and download our ‘Business support measures guide’.
Top tips to consider when making an application for funding
- If your existing lender is offering the scheme, it is advisable to make your application as an existing customer as this is likely to make the application process quicker.
- Keep in regular contact with your relationship director. Lenders want to support their customers where they can!
- Be ready to provide a full financial pack which includes information about your businesses cash generation for the previous two years.
- When providing your business plan and future forecasts be clear about any assumptions you have made in creating the forecast.
- Be honest and upfront about what measures you have already taken to protect your business for example furloughing of employees and rent reductions.
- The application forms are designed to pick up on government requirements so try to answer the questions as comprehensively as possible.
“The banks are showing an increasing amount of agility in order to process these applications and get funds out of the door
Other forms of support
- All high street clearing banks have been proactively raising discussions with their customers to determine what steps can be taken to support their business in the short term. Their relationship directors have also been empowered to offer different forms of non-debt support as quickly as possible, examples include:
- Actioning financial covenant amendments, waivers and deferrals for customers;
- Interest capitalisation/deferral;
- Capital repayment holidays;
- Deferment of scheduled valuations;
- Automatic extensions of facilities on their expiry.
- There is liquidity out there, albeit at a cost. There are a whole host of alternative financiers who can offer funding, but this comes at a cost as the finance is often more expensive. It is also possible that you would need to seek consent of your existing lender.
- There is evidence to suggest that all loans sanctioned prior to the onset of the pandemic are being honoured with new lending still being processed. However, support in the way of new lending applications outside of the government backed structures is proving rare, largely because the government schemes are cheaper for the customer and are preferable for the lender because of the additional security offered by the government.
Key takeaways
- Communicate with your lender regularly, they want to support you where they can.
- Be alive to all of the support measures that are available to your business. If you are nervous about taking on more debt, be mindful of the other relief measures which have been made available by the government.
- Take advantage of the increasing levels of agility which the banks are demonstrating.
- There are alternative finance providers which might also be able to assist outside of the government backed schemes.
For details of future webinars in our Business Leaders series, please use the link here.
Disclaimer
This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.