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BUSINESS SURVIVAL & GROWTH

THROUGH COVID-19 & BEYOND

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Borrowing

Borrowing

The landscape of borrowing is changing with COVID-19, support from a range new support and sources. Use the right borrowing and it will fuel your business.

BORROWING

Interest Rates

Bank of England base rate 0.1%

As of 19th March 2020

CBILS - Before Applying

Do everything you can internally to save cashflow.

Lenders will expect this, as a perquisite to lending.

CBILS info here

Other Options

Loan repayment holiday.

Overdraft.

Invoice factoring.

VAT & PAYE payment delays.

Project Cashflow - 12 Months

Work out how much you need to borrow, best and worst case.

 

Lenders will require 12 months cashflow.

Approach your own bank first

Banks are prioritising or restricting lending of CBILS to their customers.

Access to CBILS

Businesses are experiencing difficulties accessing CBILS loans. Pressure has been put on the Government, to in turn pressure the Banks, to remove some of the access barriers.

Two changes widely publicised, no requirement for a PG under £250k and you can now apply straight for a CBILS loan (as opposed to the banks offering one of their commercial products).

More definitely needs to be done. 

CBILS

Bounce Back Loans

100% Gov backed, Bounce Back loans, 25% of turnover up to £50,000

 

"There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in."

Most businesses will receive funding within 24 hours, Sunak promised

 

Loans:

£2,000 to £50,000

no fees

no interest first 12 mths

term up to 6 yrs

 

"This will also be relatively cheap finance, so micro-companies may choose to use the scheme even if they do not need to. It could be one way of paying back a credit card bill, said one banker." 

the FT.com

 

Gov details here

Loan Schemes

The British Business Bank has launched the details of the new Coronavirus Business Interruption Loan Scheme (CBILS) which is now open for applications for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow. Full details of the CBILS scheme can be found here. but the main criteria are:

 

  • Loan facilities of up to £5m

  • 80% of the lenders risk is covered

  • Repayment terms up to 6 years for term loans and asset finance, but overdraft and invoice facilities will be up to 3 years.

  • No upfront fees and interest is covered by Government for up to 12 months

  • Companies remain 100% liable for the debt repayments. Total unsecured lending of up to £250,000.

 

Application for loans from the scheme is administered by over 40 approved lenders including main banks, challenger banks and asset finance etc. Businesses need to apply directly to the lenders and present their case for the finance needed.

Pre-revenue, very early stage businesses:

The CBILS Loan scheme is not suitable for pre-revenue, very early stage, low revenue start-up/seed businesses. UKBAA is working together with BVCA and many other leading players to gain the Government’s support for alternative finance/tax mechanisms, including ones that help to stimulate/leverage the investment market at this time.

* We will keep this page updated on other measures being made available.

Measures now agreed or being put in place for small businesses include the following:

  • Coronavirus Job Retention Scheme: 80% of employees’ wages can be covered up to £2,500 per month that can no longer be paid ( ie “furloughed. The scheme will be administered by HMRC through a special portal being established with details available shortly.

  • VAT will deferred for 3 months from 20th March to 20th June 2020

  • Income tax prepayments under the Self Assessment scheme due in July 2020 can be deferred until January 2021 includes self-employed.

  • Statutory Sick Pay costs to employees will be covered for two weeks – a rebate scheme is being developed- not yet available

  • Business Rates Holiday for 2020-21 tax year for businesses in the Retail, Hospitality and Leisure sectors – no action needed will be applied to next Council tax bill

  • Cash grants for Businesses in the Retail, Hospitality and Leisure sectors – up to £25k per business property for those with rateable value of £15k-£51k and £10k for those in these sectors with lower rateable value – no action needed will be directly contacted by local authority

  • Small Business Grant Scheme – £10k for businesses (any sector) already receiving Small Business Rate relief – based on property occupation – available through local authority

Further details on these schemes can be seen at the government website: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19

Amy Newton, ACMA 
consultant
Supporting you
Sarah Platt, ACA 
consultant

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Hannah Sage, ACMA 
management accountant

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© 2019  Amy Newton
Borrowing

The landscape of borrowing is changing with COVID-19, support from a range new support and sources. Use the right borrowing and it will fuel your business.