Word on the street – 1st May 2020

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Summing up the market from our various conversations with Banks, Finance Houses and Accountants

The week got off to a positive start with the announcement from Chancellor Rishi Sunak that small businesses will be able to benefit from a fast track finance initiative; The Bounce Back Loan Scheme. According to Mr Sunak, businesses will be able to borrow between £2000 – £50,000 and access the cash ‘within days’. The loans will be interest free for the first 12 months and businesses will be able to apply online.

It’s intention is to provide small businesses with a much needed injection of cash to ensure continued trading and operation, alongside the existing CBILs scheme and the tax deferral initiatives already in place. Crucially, the government will guarantee 100% of the loans and there will be no fees or interest payable for the first 12 months.

The scheme will open on Monday 4th May and loan terms of up to 6 years will be available through a network of approved lenders. You will be able to apply for a bounce back loan if you meet the following criteria:

Your business is UK based
Your business has been negatively affected by Covid 19
Your business was not undertaking in difficulty on 31st December 2019

It’s worth noting that if your business has already received a CBILs loan of up to £50,000, this can be transferred into the Bounce Back scheme if you so wish, although this has to be arranged with the lender and before the 4th November 2020.

Demand will no doubt be high so it will be interesting to see if some of the lessons learned from the early days of the CBILs applications will have been applied. At the time of writing further details on how to apply are yet to be released but as and when they do, we will of course keep you updated.

On the subject of government financial support, the 30 or so clients we have spoken to thus far have had an extremely positive experience with the Coronavirus Job Retention (Furlough) Scheme. A number of them reported receiving funds within 48 hours of application and credit has to be given to the government for the speed and simplicity in which these applications are being handled. The feedback has genuinely been fantastic.

At present, an employer can only furlough staff under the scheme for up to three months, and an employee can be furloughed for a minimum of 3 weeks. Furlough pay can be backdated to March 1st if an employee was not working at this point, meaning currently the scheme is due to end on June 1st, however Chancellor Sunak has said the government would consider extending the scheme depending on how long the Covid 19 pandemic lasts.

If you have yet to make an application for the job retention scheme and intend to do so, you can apply via the government website and applications should take around 15 minutes to complete.

Elsewhere, last week we spoke to one of our lender contacts within the finance sector who informed us they had good reason to believe the construction sector would be returning to work in the very near future. This morning (May 1st) Barrat Developments announced their intention to safely return to work on its constructions sites from May 11th, the first phase of which will see work resuming on 50% of its sites. Taylor Wimpey had already announced a planned return date of May 4th.

Of course social distancing & safe working measures will need to be in place, but it is a positive sign for the sector. However, a recent Knight Frank report did reveal there could be a drop of up to 35% in production in the construction sector. Perhaps the biggest threat to the industry on its return, alongside liquidity of course, will be supply chain capacity with sourcing materials and labour a big hurdle to overcome in the early stages.

A print webinar we attended on Thursday echoed these supply chain concerns, with calls to bring the supply chain to work together and contribute to the long term health and success of the print sector. It is vital that suppliers understand their role in ensuring the long term success of their customers and look at ways to support and help navigate them through this period. There is a balance to be struck of course however you want your customer base to still be there in 2021 and placing orders!

We’ve spoken to a number of smaller manufacturing businesses who have actually adapted and diversified their manufacturing operations to develop new products, such as a clothing manufacturer in the North East who was able to pivot their business activities during this period and look towards producing protective clothing. Part of the reason smaller businesses are able to pivot so quickly and relatively easily is due to the fact they have far less complex supply chains than larger companies. If you are a manufacturing business for example, have you considered how your operations could be diversified?

This weeks advice tips include:

  • Think about your long term strategy and how you may be able to help your customers as they navigate their way through this period. Of course the health of your own business is your main priority but as the old saying goes: your customers are your business
  • One area we haven’t touched on yet is the need to remain vigilant online. During times of uncertainty criminals will use this to their advantage as minds are elsewhere. If you’re searching for info or looking for financial support or assistance, ensure its from a reputable source.
  • Pivot. We’ve seen everything from Gin distilleries producing hand sanitizer to Rolls Royce producing ventilators. If your main business activities have been hindered by COVID 19, consider the ways you could pivot or innovate
  • 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.

    email us: info@thebusinessboard.co.uk
    call us: 0118 338 1818

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