Accessing government-backed support for business will be critical for many businesses.
For those managing businesses, the current situation can be nothing short of a crisis and the government has stepped in to support businesses. While details of the government-backed support are still emerging and are subject to change, we know there are two types of support being offered at the moment.
The first comes in the form of grants available to smaller businesses (and for these purposes ‘small business’ is defined by reference to business rates and the sector they operate in. As a grant, we assume businesses will not need to repay funds advanced. There may be conditions attached to watch out for. If you are eligible for small business rates you will be able apply for a grant for up to £10k. If you are in the retail hospitality and leisure businesses with a rateable value between £15k and £51k you will be able to apply for £25k. We don’t know the mechanism for applying for those grants and we expect that information to be available next week.
The second comes in the form of ‘bridging loans’. While the details (and some of those details will be very important) have yet to made available, initial indications are that:
- Preferential terms will be available for a fixed period of six months or one year.
- The loans will be repayable in full.
- Applications need to “have a sound borrowing proposal”.
We don’t know what a ‘sound borrowing proposal’ will look like but we are planning to support our clients to create business plans and cash flow forecasts based on acceptable practice. To date, many businesses have been preoccupied with crisis management, supporting staff and adapting to homeworking. As a clearer picture of forecast revenues emerges, their cash flow forecasts will help make timely decisions that will keep the business going and understand the risks they are taking on board by drawing down on a repayable loan.
Understandably, many businesses and their finance teams will need help to prepare their applications in a way that allows advances to be made as quickly as possible and to ensure they have also taken advantage of other support schemes available to them. Get in touch if you think we can help.