We’ll start by saying this is just one of many guidance updates that we will be writing over the coming days and weeks, that will hopefully provide some clarity among the mess going on around us. To kick off, you aren’t alone with your questions in response to the Chancellors announcement outlining the package of measures for businesses. The main question on everyone's mind is quite simply, “but what does this mean and how can I access the benefits”.
Clear direction and answers may not be available for a few days, and there may be even more measures for smaller businesses and self-employed freelancers, contractors etc. In a time where one minute you are preparing for IR35 and the next minute it’s deferred, it’s very overwhelming but we want you to know you are by no means in this alone.
What we can say, is that you shouldn’t wait. This ‘limbo’ time is the time where you need to get ahead and get ready to make the most of the help you are offered. Getting funding is hard enough, and when you receive more clarity on how to apply for the Coronavirus Business Interruption Loan Scheme (CBILS), you will be amongst 6m businesses in the country waiting to jump on it.
The CBILS facilitates business finance to smaller businesses that are viable but unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. The borrower always remains 100% liable for the debt and the time to access is 4-12 weeks.
The benefits / negatives of CBILS :
- 40 financial institutions can provide finance through the EFG
- 80% of the loan is guaranteed by the government so this means lenders are more willing to lend
- Loans available up to £5m (increased from £1.2m on 17 March) subject to affordability
- The borrower is still responsible to repay the loan
With the help of Kirsty McGregor, Founder of The Corporate Finance Network, the following ‘to-do’ list is all about helping you get organised, finding out your business’ numbers and locating your contact details/account numbers.
- Collate a list of all your outgoings from either your banking app, statements or accounting system. You will be going through these line by line in due course and assessing how to reduce them. The key is going to be to reduce working capital as much as you can with agreed new payment terms with your suppliers and financiers.
- Whilst we will be working remotely, we are still completely contactable through all the usual channels to ensure you have communication channels open with us. In the coming weeks, you may need us to assist in communicating with HMRC and possibly also your finance companies/banks.
- Pull together a list of all your bank loans/overdrafts, finance agreements, credit cards, HP/leases, debtor finance/factoring etc with phone numbers/email addresses to contact the lender and your account numbers
- Pull together the same list for your utilities and rates - contact details and account numbers
- Do all this for your personal household expenditure too - mortgage providers etc.
Over the next few days, we will be sharing advice on how to reduce your daily/weekly/monthly working capital outgoings, why it’s important to know your numbers and how to access new finance. If you are looking at raising finance, either under the CBILS or otherwise, we have the contacts to make this easier and even quicker, so don’t hesitate to get in touch with us.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559. As always, if you want to speak to us with regards to any of the above, or with any questions or concerns you have – please get in touch via info@raffingers.co.uk
View next update: Contacting Suppliers and Lenders | Coronavirus
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