What government support options are available for my business?
How do I know if my business meets the criteria for business rates relief and how do I claim it?
What is the Coronavirus Business Interruption Loan Scheme (CBILS)?
What is the latest guidance on CBILS?
How can you work with funders to alleviate liquidity problems?
What should I do if my business is at risk of having its finance pulled?
How can I protect my cash flow?
What support can the banks and the private sector offer?
How can HCR help me access the support available for my business?
What government support options are available for my business?
There are a range of options including Bounce Back Loans, CBILS, CLBILs, the Future Fund and the Covid Corporate Financing Facility. All except the Future Fund (which has now closed) now extend to 30 April 2021 or beyond.
Read our summary table for what is available, the eligibility criteria and procedure for claiming.
Last updated February 2021
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How do I know if my business meets the criteria for business rates relief and how do I claim it?
Answered 27 March 2020
As a result of Covid-19 the government has forced many businesses to close. In addition to other measures the government has brought in, businesses in certain sectors will be eligible for some form of rates relief in the 2020 to 2021 tax year.
The list of eligible business types and the relief available to them is set out in this article.
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What is the Coronavirus Business Interruption Loan Scheme (CBILS)?
Answered 19 March 2020. Updated 3 April 2020
The temporary Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
It is provided by the British Business Bank via more than 40 accredited lenders and will offer financial support to SMEs across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the Covid-19 outbreak. The scheme provides the lender with a Government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. The borrower will always remain 100% liable for the debt – it is not a grant. The Government will also cover the first twelve months of interest payments and lender-levied charges.. The maximum value of a facility provided under the scheme will be £5m. To find out if you are eligible and for more information, visit:
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils
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How can you work with funders to alleviate liquidity problems?
Answered 19 March 2020
You have a range of options – some of the most important are:
- Debt service deferment; putting off paying either principal or interest – this is one of the most immediate ways of boosting liquidity, and if your lender agrees, it’s fairly straightforward.
- Increasing headroom within a working capital facility, such as increasing an overdraft/borrowing limit – look at whether you have good quality unencumbered assets available to support this, or perhaps good cover provided by existing security (e.g. a favourable loan to value ratio).
- Bridging finance pending raising further equity – this is most likely with your existing lender, particularly if there is reasonable security cover.
- Extending the loan period – to amortise the debt more slowly, or move some of the principal repayment to the back end of the loan period (as a “bullet” payment) making debt service more manageable over the whole loan period. This may be necessary if the business has to work its way through a longer recession.
- Sale of assets to raise cash – if they are subject to security or similar constraints, remember that you will need to talk to your lender about
this.
All of the above may be made easier with Government support.
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What should I do if my business is at risk of having its finance pulled?
Answered 19 March 2020
We all hope that lenders will not be trigger-happy, but make yourself familiar with your obligations so that you can comply with them as far as possible and avoid defaulting, or potentially defaulting.
- Reporting obligations – standard financial reporting, possible specific financial covenant reporting and, almost certainly, an obligation to report any events of default or potential events of default; give lenders early warning of anything default-related.
- Events of default – Failure to pay principal or interest on due date is the most obvious default so, if a debt service date is coming up and you are unsure whether you are going to be able to cover it, discuss this with your lender as soon as possible. When any event of default occurs, your lender can call in (accelerate) existing facilities or refuse to make further advances (indeed, even potential events of defaults can give them this power). There are a range of other types of default including breaching your reporting or other obligations, defaults with other finance providers, default in paying other creditors, possibly even renegotiating terms with a creditor or group of creditors; keep your lender in the picture.
- Financial covenants – check your facility documents for financial covenants, the consequences of breaching them and when they are next due to be tested. If you have concerns about compliance, talk to your
lender.
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How can I protect my cash flow?
Answered 2 April 2020
Here’s our non-exhaustive “cash preservation checklist” with entries which every manager has an opportunity to influence:
- Collect debts with renewed vigour – this will become increasingly difficult as all businesses feel the cash pressure.
- Cut all non-essential services and accounts – no unnecessary cash bleed at all.
- Payments out only because of necessity – prioritise on the basis of business need only. It sounds harsh, but this is about business survival.
- Make use of the government financial support schemes for business – do not assume that will assist your immediate cash flow.
- Furlough staff if possible – it allows you to recover 80% of their furlough wage. But note – you have to pay your staff and reclaim and there is a reportedly long time lag attached to this so again will not solve immediate cash flow issues.
- Redistribute funds for HMRC payments where these have been suspended by HMRC.
- Negotiate standstill agreements or payment holidays with landlords – they will want to retain a healthy business as tenant.
- Negotiate standstill agreements or payment holidays with utility providers and banks.
- If there are historical debts, negotiate longer payment periods or payment holidays.
- Consider asking staff to take salary reductions – but lead by example.
- Consider whether a temporary business shutdown is feasible.
Business owners and managers have never been under greater pressure or scrutiny. While the government is moving forward with plans to suspend wrongful trading sanctions during the Covid-19 crisis, your fiduciary and other duties to act in the best interest of the company
continue.
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What support can the banks and the private sector offer?
Answered 23 March 2020
Unlike the 2008 financial crisis, Covid-19 represents a massive demand-side shock to our economy, and so lenders are still lending. A number of mainstream banks have dedicated support pages and we have provided links to some of these below:
- HSBC – hsbc.co.uk/help/coronavirus/
- Barclays – home.barclays/news/2020/03/supporting-our-customers-and-clients-impacted-by-coronavirus–co/
- Lloyds – lloydsbank.com/business/coronavirus.html
- NatWest – business.natwest.com/business/support-centre/service-status/coronavirus.html
- Santander – santandercb.co.uk/coronavirus
Speak to your bank at the earliest opportunity if you are concerned about the effects of Covid-19 on your business. You should be discussing options such as capital repayment holidays or reductions, short term facilities or increased credit limits.
Consider short term facilities – a number of lenders (not just the mainstream funders listed above) offer short term, working capital facilities which could support your business. We work with a great number of such liquidity providers and can work with your business to access such funders. Options can include invoice finance facilities, business credit cards, merchant cash advances etc.
Also consider alternative debt providers, who offer different sources of capital. We have strong links to many of these institutions and can assist you with introductions and any subsequent capital
raises.
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How can HCR help me access the support available for my business?
Answered 3 April 2020
We can help you by:
- Making applications to the government support schemes on your behalf
- Discussing key steps you should be considering in the immediate, medium and long term around Covid-19
- Advising on how to approach your bank or other funding partner to seek help
- Facilitating introductions to new funding partners.
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