Summing up the market from our various conversations with Banks, Finance Houses and Accountants
Latest Coronavirus Government Lending Figures
|Scheme||Value of facilities approved||# of facilities approved||Total number of applications|
|Bounce Back Loan Scheme (BBLS)||£23.78bn||782,246||964,414|
|Coronavirus Business Interruption Loan Scheme (CBILS)||£9.56bn||47,650||93,505|
|Coronavirus Large Business Interruption Loan Scheme (CLBILS)||£1.57bn||244||615|
*As per the latest official figures reported to the Treasury at close of play on 7th June
Looking at the above figures in more detail, we have seen the following differences from last weeks data:
Week on Week Comparison: Close of business 31st May -7th June
|Scheme||Increase in applications since 31st May||Increase in approved applications since 31st May||Increase in value of approved applications since 31st May|
|Bounce Back Loan Scheme (BBLS)||91,222||82,892||£2.49 billion|
|Coronavirus Business Interruption Loan Scheme (CBILS)||3,581||1,807||£0.64 billion|
|Coronavirus Large Business Interruption Loan Scheme (CLBILS)||36||53||£0.46 billion|
Away from Government backed coronavirus lending, The Office for National Statistics (ONS) this week published UK Growth figures for April and unsurprisingly, they made for grim reading. The UK’s economy shrank by an eye watering 20.4% in April, making it the largest monthly contraction ever recorded. To put that figure into perspective, that’s 3 times greater than the decline seen during the whole of the 2008 – 2009 economic downturn. Shockingly, the UK’s economy ended April 25% smaller than it started in February. The ONS data showed that some of the biggest contributors to the decline came from new car sales, pubs, health and education. As expected, house builders in particular were significantly impacted. Whilst these findings are extremely concerning, leading economists are confident that April will be the lowest point of this downturn and some surveys and trackers have indicated a pick-up in economy activity, although the bigger question is how quickly the economy can recover. With high street shops in England scheduled to re-open on Monday 15th June we should start to see a little more ‘normality’ return to day to day life and consumer spending however should the government be doing more to stimulate the economy? There is no doubt the government lending initiatives through furlough schemes, loans, grants and tax cuts have protected millions of jobs and thousands of businesses up and down the country, but should we be looking to our European counterparts for inspiration? In France the government are offering significant rescue funds to the aerospace and car manufacturing industries whilst in Germany, VAT has been slashed. The job schemes Chancellor Rishi Sunak has implemented will have protected livelihoods but will his rescue package be enough to spark a swift recovery for the economy? Time will tell.
Elsewhere in the UK, there were some positives to glean from this weeks business news. Anglo-Dutch consumer goods firm Unilever is reportedly set to combine it’s two businesses into one UK structure. The news comes after a rumoured move to the Netherlands in 2018 amid speculation regarding Brexit failed to materialise. The threat of removal from the FTSE 100 index should the move to Rotterdam go ahead would have no doubt played a part, but amidst the current economic turmoil the announcement that a major player in the consumer goods market intends to remain on these shores is most welcome. In the tech sector, figures released this week by the Digital Economy Council showed that investors continue to back some of the UK’s most promising tech businesses, despite the challenges posed by Coronavirus. The UK has long been a global leader in technology, with London based tech firms alone raising £3.2 billion since the start of January. That’s more than Tel-Aviv, Berlin, Stockholm and Paris combined! Perhaps not unexpectedly, fintech dominates fundraising figures in London accounting for 39% of 2020 fundraisings. The figures are encouraging and certainly point to the resilience of the sector and its ability to emerge from this pandemic strongly.
Rounding off this edition of Word on the Street, we spent some time this week speaking to some of our clients from the print and manufacturing sectors and had various conversations around the government lending schemes and the best ways in which to utilise the funding. Looking specifically at the CBILS scheme and the asset purchase facilities currently available, the conversation we had with one client from the manufacturing sector focused on the opportunities that could be capitalised on in these areas. A CBILs asset purchase agreement can enable you to update your current plant and machinery without a deposit and with the government paying the first 12 months interest. The proceeds of the sale of your current equipment could then be re-injected into your business. This pandemic has presented businesses with a unique situation that many are finding ways to take advantage of, however it must be pointed out that CBILs is currently due to end in September so there is an element of urgency if you are looking to benefit. At The Business Board, we are constantly engaged in conversations with clients regarding their finance strategy, cost analysis and planning. If you are seeking guidance or advice in these areas, we’d be happy to help.
This weeks advice tips include:
- Focus on ‘no regret actions’ – Its important to take practical steps now to make a difference in the medium term, but we also need to push forward with the long term targets that are consistent with our recovery agenda. The recovery plan for your business should be strategized in phases; the long term is incredibly uncertain, so wtry focusing on the last 2 quarters of this year and the first half of next year
- Build meaningful relationships with your clients- Many SME businesses often rely heavily on repeat business and customer referrals. With that in mind, be aware that many of your clients are experiencing their own challenges regardless of the sector they are in. Can you identify those challenges and provide solutions they haven’t even considered yet? How you respond to your clients problems in this period could define your relationships in the long term. Its often the support you provide in times of need that lasts longest in the memory.
- As always, its the same message from us each week; ensure you have a detailed picture of your business and how it has been affected by COVID-19 in place to ensure any funding application is processed quickly: Lending Criteria Tips
Good luck and stay safe, and do let us know if you would like help with any of the above.
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