COVID - Business Finance To Do List 4
Accessing new finance used to be very time consuming and take months, whether for working capital or longer term development/asset finance. But thankfully we now have more finance companies than ever (often called the challenger banks or disrupters) and nowadays you can agree a new facility within hours.
If you have a good accountant, they will have contacts to make this easier and even quicker, so you can concentrate on the other important things in your business such as customers, suppliers and staffing, so now is the time to use them well.
The government has announced a range of grants/loans which, when the detail is known, I will add to this blog. Whilst that is being set up, I have listed other sources of finance which may be quicker.
Disclaimer: as a business owner, and especially if you are a company director, you need to be very careful that you don't trade insolvently and take out further credit which you know you will not be able to repay. Having said that, the government are suggesting loans to assist struggling businesses so they may be about to ease those solvency rules, but be sensible. If there is no way you are going to be able to continue in business after this crisis has ended, be careful about what finance you take on (also for your stress and anxiety levels!)
Types of finance and providers are:
Overdrafts and loans - from high street banks or finance companies: Many banks are announcing emergency facilities for their customers so hopefully you have already spoken to your bank (covered in Blog To do List 2) so you know if they are willing to extend more facilities to you. They may ask for extra security (personal guarantees, charges over your personal house/assets etc) Check the fees as well as the interest rate and repayment terms - arrangement fees and early repayment fees. The Government has announced the Coronavirus Business Interruption Loan Scheme, similar to the Enterprise Finance Guarantee scheme, where the government will secure 80% of your loan to the bank, making it more likely that they will accept your proposal. More information will be posted here when we know the details.
Unsecured loans, revolving finance, peer to peer lending or merchant finance - there are hundreds of providers in the market but for a more tailored, quicker and sensible approach, ask your accountant to use the market-leading platform Capitalise
Credit cards and fuel cards - from banks & other finance companies. eg All Star Fuel Card provides you with up to 44 days credit, but repay in full if you don't want to incur any interest. Apply online or over the phone www.allstarcard.co.uk or Account Manager 01793 384269 or email email@example.com
Debtor finance - either financing a full debtor book or individual invoices. Many providers of debtor finance or for single invoice financing discuss options with Market Finance
Leasing - finance leases, HP or operating leases. Use a specialist broker for access to a wider market, for advice and speed. Highly recommend the team at Bluestone Leasing
Grants - government grants have been announced for certain businesses. Local Authorities will be administering these. More information will be posted here as we know it. This is only available those who pay rates (or did pay rates before the rate relief) A £10,000 cash grant for our smallest businesses, delivered by local authorities. Small businesses that are eligible for small business rate relief (SBBR) or rural rate relief will be contacted by their local authority - they do not need to apply. The funding will be provided to local authorities in early April. Plus a £25,000 grant will also be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
So once you know your working capital requirements, have sourced appropriate facilities, now you can concentrate on building again for the future. Find yourself a network of other business owners to share challenges and ideas (ask your accountant to set one up), diversify your business into new products/services where you can, be innovative, communicate well with your customers and potential customers, look after your staff, and yourself, and plan to come out of the other side stronger and ready to grow.