Summing up the market from our various conversations with Banks, Finance Houses and Accountants
With many of the accountants in our network busy helping clients compile their furlough applications this week, we took a step back to allow them to focus their efforts on those matters and made ourselves available for any assistance we could provide.
The British Chamber of Commerce found that more than two thirds (71%) of UK companies have already furloughed staff, which represents an 8% increase on last weeks figures. Within 30 minutes of going live on Monday 20th, the scheme had already received applications for 67,000 workers. By close of play on Monday, 140,000 applications had been made. Understandably, accountants up and down the country have been inundated with requests for their assistance so it’s no surprise we heard a lot less from them this week than usual.
A recent webinar we attended for the print sector highlighted some interesting topics, with perhaps most alarmingly some reports indicating a 70% reduction on orders since the lockdown measures began. Being a capital intensive sector, many of the UK’s circa 8,400 print businesses are reliant on funding facilities and with so many holding on to their cash for longer, invoices previously paid in 30,45 or 60 days are falling into the aged debt column.
The furlough scheme has proved extremely successful and the government deserve credit for the initiative; on the whole the feedback we have had from our clients has been very positive on that front. CBILs lending however has thus far proved to be much less effective with one SME business stating it took 16 days to receive a call back from one high street bank regarding an application.
Elsewhere many of the concerns from SMEs seem to centre around the government initiatives and the alternative funding options. The general consensus is the high street banks struggled initially with the sheer volume of requests and aligning their internal processes to cope, but that seems to be improving daily and application turnaround times do look to be reducing. There were also too few approved lenders to cope with demand but with more challenger banks and non-bank funders gaining government approval this has also helped to ease the bottleneck.
Certainly the challenger banks and non-bank funding route seems to be proving much quicker for many applicants due to their slicker fin tech and application platforms allowing them to process enquiries much faster. As always, the message from last week is the same, ensure you have a detailed picture of your business and how it has been affected by COVID-19 in place to ensure your application is processed quickly: Lending Criteria Tips
We are expecting to see a real spike in funding applications when the lockdown measures are reduced and businesses can start returning to business as usual, however that may look. There is a real danger of ‘overtrading’ as businesses struggle to fulfil the volume of orders without the capital to purchase stock and supplies required. Have that in your sights and try to forecast accordingly and if you have a finance facility in place, speak with your provider to see how they might be able to help. We assist many of our clients with finance strategies and comparative analysis on funding so if that’s something you would like assistance with, please do get in touch.
We’ve also still been receiving enquiries from businesses/investors keen to make acquisitions. Whilst many businesses are understandably focusing on sustaining day to day business activities and figuring out cash-flow strategies, others are still looking to be active in the M&A market. It’s a changed landscape of course and there are ‘other than normal’ aspects to consider in the current climate but it’s worth mentioning and being aware of as you consider all the options available to you.
Some advice tips include:
- Communicate, communicate, communicate – If you have a finance facility in place, speak regularly with your provider to give them an update on your current situation and any forecasting you can to ensure the facility is as effective for you as it can be
- If you are interested in a CBILs loan, assess all of the options available to you and if you are finding your high street bank unresponsive, consider approved challenger banks and non-bank lenders to speed up the process
- Be pro-active and forecast how your business may look once the lockdown measures are lifted, having everything prepared and in place for your return to trading will help to ease the pressures of fulfilling orders
- Try to stay positive – It’s been a long few weeks but there are signs on the ground that processes are improving and much needed financial support is starting to get to those who really need it
Good luck and stay safe, and do let us know if you would like help with any of the above.
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