Coronavirus finance updates

Coronavirus business finance update

During the current Coronavirus (COVID-19) crisis this page will be frequently updated with business and property lending updates.

Please follow the links below to access finance or to help your business survive the Coronavirus outbreak.

The links above will give the latest information advisors can advise on the Coronavirus Business Interruption Loans Scheme and on alternate business lenders who are supporting small businesses hit by the lockdown.

For more information contact us now.

CBILS – Coronavirus Business Interruption Loan Scheme

Coronavirus business finance update

As news continues to trickle out about the UK Government supported lending scheme we’ll continue to update you.

All the major high-street banks are signed up to deliver the scheme and so if you have a strong business and a good relationship with your bank then they should be your first port of call.

Your bank will have relaxed their lending criteria somewhat but they are by no means “giving money away”;

There are some 40 lenders in the scheme so if your bank is unable to assist then there may well be another option.

Your advisor team is working closely with our whole panel of lenders to keep abreast of which lenders are still lending and which have shut up shop. Contact us now and Save your business.

UPDATE – 26/03/2020 14:00

This just in from one of the high-street banks, I’d expect the others to be broadly similar;

  • Coronavirus Business Interruption Loan Scheme (CBILS) covers lending to businesses between £25,001 and £5m
  • Guarantees and debentures are likely to be required depending on the level of funding requested
  • Loan term will be 1 – 6 years with a possible payment holiday for the first year
  • The loan is capped at 25% of the 2019 turnover OR 2 x annual wage bill, whichever is greater
  • The loan can only be used where “the bank” would assess the business to have been viable in 2019 and that you will be able to recover from the Coronavirus crisis

They are asking for their normal lending requirements;

  • 3 years accounts and management information up to date.
  • Full details of existing debt
  • Cash-flow forecasts
  • 6 months bank statements for each business and personal bank account (every director/major shareholder)
  • Personal assets, liabilities, income and expenditure for every director/major shareholder
  • What security is available or being offered
  • What other options have already been explored – Furlough, business rates relief & grants etc.
  • How long should it take to recover once the restrictions are lifted and what plans/challenges are being considered

Considering some of that information will not be easy to come by some of our customers are opting to work with non-CBILS lenders, forgoing the payment holiday and instead working with lenders who can approve and have funds ready to draw down within days.

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Coronavirus finance update

How to calculate and minimise your business cash-burn

get paid faster £5 invoice finance from acorn finance

As the Coronavirus crisis deepens every business owner needs to examine their cash flow position and take every possible measure to save their business.  Don’t wait for the bale out, not every business will be able to take advantage of it.

If you have an accounts package such as Xero, Quickbooks, Sage or Wave then it’s relatively simple to breakdown expenses by category and do some analysis.  If not then here’s a simple method to calculate it yourself;

  1. Download your recent bank statements as a spreadsheet, this should be possible whichever bank you’re with but is different for each one. so if it’s not something you’ve tried before just search **** bank CSV export. You’ll find help and advice from your bank to help you through the process.
  2. Once you have the download import it into Excel, Numbers or Sheets – whatever spreadsheet software you are used to. It’s important to import not just open it as this will let the software know that the commas in the download break the columns of the spreadsheet.
  3. Now you should have a series of columns, again these will depend on your bank but ours show;
    • Date, Payee, Reference, Type of transaction, Amount and Balance
  4. Now go through the columns categorising each payment as;
    • Non-essential, Negotiable or Fixed
  5. At this point put a * next to each item you’ve marked as Fixed and we’ll assume they are negotiable. Contact each and every supplier or creditor to extend credit or payment terms to see where you can improve your situation.
  6. Anything that’s non-essential try to reduce or cut it completely.
  7. Now go through what’s left – with your new terms and your reduced non-essential spending total the column – That’s your cash burn.

The next step is to imagine how long the Coronavirus crisis could go on for – three months, six months? Nobody really knows the answer to that so work on the longest period you think might be possible, multiplying your average monthly cash-burn by the number of months – then take that off your savings in the bank.

Only once you’ve been through these stages are you able to consider applying for loans either throught the special government schemes or the general lending market.

Coronavirus finance update

Interest rates down to 0.1%

Bank of England

In a shock move today (19 March 2020) the Bank of England have cut interest rates to an historic low of 0.1% and restarted Quantitive Easing buying up £200bn of government bonds.

In a special meeting held at the Bank today members of the Monetary Policy Committee voted unanimously for the cut to the lowest base rate the UK has ever seen.

The further cut today was especially surprising coming only a week after the previous cut of 0.5% to 0.25% – itself a record low.

Borrowers – especially the majority of business owners who have a higher tendency to be exposed to variable rate funds, will see reduced mortgage and loan payments over the next few weeks as their payments are recalculated.

Coronavirus business finance update

Coronavirus update

The next few months are going to be tough for small businesses. Coronavirus has caused a massive drop in footfall, with “social distancing” that’s about to drop to zero – or close to. Business owners need to take urgent action to save their business;

  • Analyse everything your business will spend in the next 6 months (plan for the worst case scenario)
  • Negotiate now – ask for time to pay rent, VAT, PAYE, mortgage – everyone! Don’t wait for the money to run out. That’s too late.
  • Calculate your “cash-burn” for the period and what savings you have. Arrange funding for the shortfall now – even if you have to pay higher than normal rates, that’s better than losing your business, and maybe your home.

We work with a full range of business lenders, that covers business loans, merchant cash advances and commercial mortgages. Our finance specialists will work with you to provide the funding you need with the best possible terms. normal guarantees apply – so if we’re unable to arrange funding for you, we won’t charge you a penny.

While it’s safe and legal to do so – staying open might help local communities come together – if there’s space to do so. Look at other means to support the local community such as delivering meals to the elderly or chronically ill who have been advised to self-isolate or anyone else self-isolating due to symptoms or contact. It might not be a money-maker but if you can cover a few bills while supporting the local community they will remember your support after the crisis is over.

Consider opening a community shop outside your venue, if your supplies are getting through why not share this with your customers?

To find out more about calculating your cash-burn read our guide here.

Coronavirus forces Bank of England Interest rate cut.

As Coronavirus tightens is grip on the UK, the Monetary Policy Committee (MPC) of the UK’s central bank this morning issued a statement cutting interest rates by 0.5% to 0.25% with immediate effect. Widely anticipated by the markets this is still a rare move for the MPC to act outside their normal monthly interest rate schedule.

Coronavirus – economic impacts

Computer rendering of COVID-19 (Coronavirus)

An extraordinary meeting of the Bank’s MPC was held yesterday (10 March 2020) to examine the impact the COVID-19 virus has already had on the economy and the likely impacts as it spreads further through the country. Problems which will be exacerbated in the small business community which has less flexibility than larger business.

In a statement they said “Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months. Temporary, but significant, disruptions to supply chains and weaker activity could challenge cash flows and increase demand for short-term credit from households and for working capital from companies.”

Help for small business

A number of lenders have already announced that mortgage and loan payments will be suspended for businesses and individuals affected by Coronavirus and the interest rate cut will also help reduce costs for business borrowers.

With workers being urged to work from home or self-isolate if they are concerned about contracting the virus businesses face a loss of custom and reduced productivity just when they are recovering from the uncertainty surrounding Brexit and the recent flooding which has affected hundreds of businesses across the country.

Important actions to protect business from the impact of Coronavirus.

  1. Protection – take the recommended precautions now and not when emergency measures are implemented. If workers can work from home begin exploring that now, ensure hygiene standars are maintained and be vigilent. The risk from COVID-19 is still stated as moderate. Read the NHS guidance here.
  2. Anticipation – if there’s going to be an impact on your business then start to plan for it now, if cash-flow is going to take a hit then start looking at the figures now. The virus is likely to have passed within the next two months (looking at China which seems to be over the worst)
  3. Action – do everything possible to mitigate the effects on your business. Besides borrowing costs which will drop, most other costs will continue whilst sales revenue could fall. If you are going to have a cash-flow shortfall then now is the time to deal with it, not when it hits.

Talk to one of our specialists now