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)||£18.49bn||608,069||769,137|
|Coronavirus Business Interruption Loan Scheme (CBILS)||£8.15bn||43,045||84,607|
|Coronavirus Large Business Interruption Loan Scheme (CLBILS)||£0.82bn||154||502|
*As per the latest official figures reported to the Treasury at close of play on 24th May
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 17th May – 24th May
|Scheme||Increase in applications since 17th May||Increase in approved applications since 17th May||Increase in value of approved applications since 17th May|
|Bounce Back Loan Scheme (BBLS)||187,621||143,676||£4.31 billion|
|Coronavirus Business Interruption Loan Scheme (CBILS)||3,483||2,481||£0.9 billion|
|Coronavirus Large Business Interruption Loan Scheme (CLBILS)||6||68||£0.23 billion|
The latest official government figures show just a 4.29% increase in CBILs applications from 17th May – 24th May, however this is significantly lower (21%) than applications in the week previous (10th-17th May).
In the same period, Bounce Back Loan scheme applications increased by 32.26% although like the CBILs applications, this is still 27% lower than applications between 10-17th May where we saw a 59% increase from the week previous.
Finally, CLBILs applications increased by just 1.2% compared to an increase of 10% the week previously.
A very brief look at these figures suggests businesses are borrowing less but of course we would need to see that trend continue over a number of weeks to arrive at that conclusion. One area of concern is the number of businesses who fall short of meeting the strict lending criteria and where those businesses turn to next for funding.
It is important to remember that the loans were introduced to offer support to SMEs who do not currently meet the normal lending requirements for a commercial loan but would be a viable proposition in the long term were it not for the Covid-19 pandemic. The key takeaway from that statement is: ‘but would be a viable proposition in the long term were it not for the Covid-19 pandemic’. There are many businesses who would have had loan applications denied prior to this pandemic and therefore would still fall short of the lending criteria now. It’s those businesses in particular we are eager to support and assist and we have spoken to a number of clients in these circumstances to advise and guide on the options available to them. If you find yourself in a position when your business is denied a government backed loan scheme, please do pick up the phone and talk us through your situation.
Some other developments this week included reports suggesting that employers will be required to contribute between 20 & 30% of furloughed staff wages as well as NI contributions to be effective from August. This is yet to be confirmed by Chancellor Rishi Sunak however further details are expected before the end of May with the government keen to get a handle on spiralling costs. With circa 25% of the UK workforce on furlough (equating to 8 million jobs), this development will affect a significant number of businesses. We’ll keep you updated on any emerging details as they come in.
Elsewhere the Coronavirus Statutory Sick Pay Rebate Scheme launched on Tuesday 26th May. This is an online service aimed at SME businesses to recover statutory sick payments (SSP) they have made to their employees. Another initiative launched by the Government to compliment and add to their existing suite of funding schemes, this will allow SME businesses employing fewer than 250 staff to recover the costs of paying coronavirus related SSP. If eligible, businesses will receive repayments at the relevant rate of SSP that they have paid to current or former employees for eligible periods of sickness starting on or after 13th March 2020.
To qualify for funding, employers must have a PAYE payroll scheme that was created and started before 28 February 2020 and they had fewer than 250 employees before the same date.
The repayment will cover up to 2 weeks of SSP and is payable if an employee is unable to work because they:
have coronavirus; or
are self-isolating and unable to work from home; or
are shielding because they’ve been advised that they’re at high risk of severe illness from coronavirus
*Source: Gov.uk website
We’ve yet to speak to any of our clients who have made an application for the Coronavirus Statutory Sick Pay Rebate Scheme but we will of course be speaking to our network of accountants and finance professionals will keep you updated on the feedback.
We also this week heard from one business owner who is currently producing 50% of their previous turnover with just 25% of their workforce. It was an interesting point to discuss further and look at the ways in which businesses will be remodelled and diversified once the lockdown measures are lifted and some form of normality resumes. We’d heard in previous weeks from business owners who are now planning to run down the leases on their existing properties and lean into a fully remote working solution having seen how easily this could be done during the lockdown. With the realisation that downsized and scaled down operations can lead to leaner and more cost effective businesses, perhaps there will be more of an onus on outsourcing and a collaborative approach to trading. In a similar vein, we’ve also had conversations with clients looking to source finance in order to purchase kit or machinery having recognised an opportunity to ‘pivot’ and diversify their offering. Of course finding positives from difficult situations can sometimes be challenging, but if this pandemic has taught us anything perhaps it’s the importance of having liquidity whilst also being agile enough to capitalise on the opportunities as they arise or simply navigate our way through trying periods.
This weeks advice tips include:
- Be agile – The coming months may see the need to implement new software or platforms to support a new way of working. This will be a worth while investment if it boosts your business and leads to additional value during this time. Ensure your online reach is effective as possible, in a new and ‘socially-distanced’ world online visibility and connectivity has never been more important.
- Keep talking with your accountant or financial advisor – Government announcements, schemes and initiatives are being updated regularly with new directives around funding, SSP and working measures so it’s really important you are up to date with them, understand their intricacies and how they might benefit your business.
- Look after your team – As more and more of us return to offices and workplaces up and down the country, remember it’s probably been a difficult time for some. There may be concerns, fears or reservations about your new way of working that will need addressing and in some cases, new systems or platforms for teams to get used to. The desire may be to get back to trading as quickly as possible but ultimately your team will be key to doing that successfully.
- 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: email@example.com
call us: 0118 338 1818