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)||£33.68bn||1,113,312||1,349,051|
|Coronavirus Business Interruption Loan Scheme (CBILS)||£12.65bn||57,234||115,941|
|Coronavirus Large Business Interruption Loan Scheme (CLBILS)||£3.10bn||457||872|
*As per the latest official figures reported to the Treasury at close of play on 26th July
Looking at the above figures in more detail, we have seen the following differences from June’s data:
Month on Month Comparison
|Scheme||Increase in applications since June||Increase in approved applications since June||Increase in value of approved applications since June|
|Bounce Back Loan Scheme (BBLS)||163,045||145,991||£4.17 billion|
|Coronavirus Business Interruption Loan Scheme (CBILS)||11,372||4,959||£1.58 billion|
|Coronavirus Large Business Interruption Loan Scheme (CLBILS)||127||98||£0.77 billion|
This month saw the Sunday Times report that high street banks, including HSBC, Lloyds, RBS and Barclays had strongly opposed plans to allow fintech lenders access to funding from the Bank of England in order to sell loans to small businesses through the Government’s emergency bounce back loan scheme. Starved of access to cheap funding, fintech must instead rely on private backers to lend to thousands of small firms applying for emergency loans, and that resource is finite. The scheme would have seen the large banks funnelling cash from the Bank’s funding scheme to alternative lenders however some sources have speculated that commercial banks did not want to aid their competitors. We have been speaking with many of our clients over the last 10-12 weeks discussing financial strategies and funding options and would always advise speaking to your own bank first for the best rates and products. Unfortunately, particularly in regards to invoice finance facilities, we have seen many of the major high street banks ‘shedding’ their IF customers leaving many without suitable facilities. This is where the challenger banks and alternative lenders become a viable option for funding and we have been able to secure suitable and flexible flexible facilities for a number of our clients in this area. If you currently have an invoice finance facility with your bank and would like a simple finance review to see what may be available to you, we’d be happy to help.
Elsewhere, July also saw the introduction of flexible furlough, allowing businesses to bring back employees on a part-time basis effective from July 1st. Data from a British Chamber of Commerce survey showed that 31% of businesses had furloughed staff on a part time basis whilst 56% of those surveyed stating they furloughed staff full time. Unfortunately 13% of businesses had already made redundancies with a further 33% indicating they intended to do so over the next 3 months. It should be pointed out that redundancies were predictably more likely in the B2C arena, with prolonged periods of closure and suffering consumer confidence key factors. We have had difficult conversations with a number of our clients who themselves have had to reduce head count and whilst every effort was made to preserve jobs, it is often the best course of action to make the tough decisions swiftly in order to safeguard the long term future of the business. Of course this is the last resort for many SME business owners who often have a very strong, personal connection to their staff and the decisions are never taken lightly. Our free, downloadable ‘roadmap to recovery’ offers some insight into the options available to businesses in the current climate, touching briefly on such issues.
Rounding off this edition of Word on the Street, whilst July has shown some early signs of a continued recovery (albeit slowly), the BCC survey still showed businesses operating at 53% of their pre-covid capacity, with the top two challenges to day to day operations being cited as customer demand at 54% and potential future lockdowns at 52%.
On average, businesses said they were at 53% of their full pre-Covid 19 capacity. Customer demand (54%) and possible future local lockdowns (52%) were cited as the top two obstacles to maintaining day-to-day operations. The recent localised lockdown in Leicester being an example of how quickly things can change in the present landscape. 30% of respondents specified other business costs such as salaries and rent/rates as major challenges. Perhaps most alarmingly, 56% of businesses reported a slight or significant decrease in cashflow and 43% of businesses said they had experienced an increase in late payments from customers compared to the last 2 quarters of 2019.
Whilst we are starting to see a levelling off of the extreme business conditions suffered at the start of pandemic, there are still some very challenging obstacles for many businesses to overcome. As always, it’s so important to plan and project but try to retain a positive outlook. Businesses will no doubt change as we navigate our way through this period of uncertainty, and some will come through this pandemic unrecognisable from 2019. What’s important is to continue to keep an open mind and research and review all of the options available. Flexibility and resilience will undoubtedly be the key to recovery.
Good luck and stay safe, and do let us know if you would like help with any of the above.
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