The Coronavirus epidemic is a worldwide health emergency and this will ultimately result in economic challenges for many businesses.
Given the above, businesses will undoubtedly want to further understand the cash flow support that is currently available. Most businesses, in times of cash flow constraints, turn to their bank. Not surprisingly, there is a lot of attention being given to the Coronavirus Business Interruption Loan Scheme (“CBILS”) and the below provides the latest on this, whilst also highlighting further support that might be available that we absolutely should not lose sight of.
Whilst details are still emerging it is important to note this is a loan, not a hand-out, and therefore the approach to the bank needs to be in that vein. Banks will currently be inundated with enquiries, so yours needs to be structured and well thought out in advance to give it the best chance of a successful outcome.
Pertinent points to consider in your proposal include:
None of us have a crystal ball but you can be clear on your assumptions and these will need to stand up to scrutiny as best they can. Financial information will be necessary to include short term cash flows, up-to-date management information and financial forecasts.
How the banks will assess credit risk in respect of the CBILS remains to be seen, but based on our experience in difficult times the following are a number of questions they will likely consider:
The situation we find ourselves in is unprecedented and we need to recognise that, albeit your approach needs to be considered and presented in a calm and professional manner.
Don’t let the CBILS prove to be a distraction
Yes we need to understand the CBILS as one option but remember it is that – one option!
Liquidity issues can further be addressed with your bank in other ways, so open up dialogue early and speak to your bank on the following also:
Make friends and influence people – approach your relationship manager with empathy. These are challenging times for us all and, with a degree of understanding, the challenges the banks will currently be facing also can only help build rapport and thus their willingness to support.
It will likely prove a frustrating conversation. Your expectations from the announcements of the CBILS might not prove to actually be the case and, of course, this is frustrating but save your grumbles for your colleagues or for us at Armstrong Watson (we will gladly listen) as airing your frustrations to the bank will not help.
High street banks will undoubtedly be under huge strain and thus there is the temptation to look elsewhere regardless of the likely increased cost – needs must. There are a large number of alternative lenders to choose from, albeit you can waste some time looking for the right partner.
This is where our experts, such as our Corporate Finance Manager Steve Dinsmore, can add real value to the process due to his experience in dealing with the alternative finance market.
We get that every penny counts in the current climate, and there is an inevitable temptation to avoid professional fees, but please do lean on us as we are experienced at presenting propositions in good times and in more challenging times. Don’t let this prove to be a distraction from your business- where you attention is undoubtedly needed.
Whilst this piece covers off the CBILS and the banks it would be remiss not to allude to the further support the UK Government has announced. This includes (but is not limited to) the Job Retention Scheme, the self-employment income support scheme, the deferment of certain taxes, support for business rates and support for those businesses paying sick pay.