The Coronavirus Business Interruption Loan Scheme: planning ahead to keep the cash flowing.


Somewhat soberingly, recent research by the Corporate Finance Network found that nearly one-fifth of small & medium-sized entities (SMEs) could go bust in the next 4 weeks, despite the range of measures introduced by the government.

There is no doubt that the loans, grants, reliefs, and job protection schemes made available have all been welcomed by UK businesses. However, as all entrepreneurs know, cash is king. Having spoken with several clients recently, our team is finding that businesses are struggling to get the support they need quickly enough.

Fundamentally, it will be how quickly businesses get access to a cash injection over the forthcoming weeks that will dictate whether the government support available has the intended results.

The Coronavirus Job Retention Scheme received a lot of positive press coverage when it was announced. However, it is still unclear how quickly the package of support will reach businesses. It’s a common misconception amongst some business owners that the government will be paying an employee’s wages but this, unfortunately, is not the case. Instead, the company must pay its staff salaries through the payroll, in the normal way. The company is then eligible to claim a grant via an online portal to recover some of that wage cost. The online portal is not available yet and it’s not yet known how long it will be before the cash reimbursement is received. This will undoubtedly cause a cash-flow headache for many businesses.

The government has already anticipated this possibility and is directing companies to apply for finance under the Coronavirus Business Interruption Loan Scheme (CBILS) if they believe they may have short-term difficulty in paying wage costs. Hopefully, businesses will be able to access the finance they need quickly. However, there were reportedly over 130,000 loan applications in the first week of the scheme opening, and the lenders are, understandably, likely to be under considerable pressure. Reassuringly, the chancellor announced new measures, that came into force on 6 April, to simplify and speed up the CBILS lending process.

We would advise our clients to plan ahead. Do you know what your business’s cash-flow is likely to look like in the next month or so? If you think you will need some financial support, don’t leave it too late to apply. Our finance specialists have senior contacts at many of the local lenders and can support you to seek the assistance you need quickly.

Preparation is key to a quick application process. Lenders will want to see certain financial information that you can start to prepare now. Make sure that your year-end accounts are up to date and that you have some recent management accounts available, for a period prior to the coronavirus outbreak. You are also likely to need financial forecasts for the next 12-24 months demonstrating the impact of the current downturn, how you will trade out of it and, most importantly for the lender, how you will repay the finance obtained. Our Corporate Finance and Business Advisory experts are here to help you to put those forecasts together.

How can HB&O help?

We are offering a free loan application review for our clients. We’ll take a look at your application before you submit it to the lender, offering guidance for any necessary changes and highlight any additional information you may need to include to improve the likelihood of your application being approved.

Already submitted an application that has been rejected? Don’t worry! If you are turned down by one lender, you can still apply to another – there are over 40 approved lenders available. We can review your next application before you submit it to check it’s all in order.

If you’d like further information on the loan application review service, need assistance in accessing finance, or in preparing the necessary forecasts or financial information requested by a lender, please contact HB&O’s Corporate Finance Director, Greg Philp, or senior advisor, Holly Andrews or call 01926 422292.

Struggling to complete the application yourself? If you’d prefer, we can prepare and submit the whole application on your behalf. For more information on this service, including pricing, please contact Greg who will be happy to help.

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