Managing cash flow with finance: Helping clients survive and thrive
@MarketFinance
Nikki Gandhi, Partnerships Manager, MarketFinance Nikki’s hands-on approach means she’s our accountants go-to for all things funding. With over a decade of experience at major UK banks in retail and commercial banking, Nikki is best placed to understand the needs of both you and your clients.
Maintaining healthy cash flow is key for businesses at any stage, but it’s especially so amid the COVID-19 pandemic. With the government’s coronavirus business support schemes coming to an end, Nikki Gandhi, Partnerships Manager at MarketFinance, explains how to choose from the financial support still available and how accountants, as the trusted advisor, can best support businesses to not only survive COVID-19, but thrive.
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he impact of COVID-19 on the UK economy became clear this August as the ONS confirmed a 20.4% drop in GDP for the three months to June 2020. Government lockdown measures, which took effect from 23 March, forced the closure of businesses across the UK. For some it was temporary but for many the impact was permanent, resulting in the biggest drop in GDP between quarters since records began. Britain has now officially entered its first recession since the 2008 global financial crisis. Government support schemes nearing closure While the recession will knock business and consumer confidence, the closure of the UK government’s coronavirus support schemes for businesses in the coming months will add to the pressure. The Coronavirus Business Interruption Loan Scheme (CBILS) as well as the Bounce Back Loan Scheme (BBLS), designed to support businesses adversely affected by the pandemic, have done well to get the economy 94 / Issue 24
back on its feet in the second quarter. CBILS applications are due to close at the end of September. Lenders have until 30 November to approve this government-backed funding. The BBLS, for loans less than £50,000, will close in early November. As the furlough scheme ends, and with uncertainty around the direction the economy will take, there have been calls to extend both CBILS and BBLS applications into 2021. This has the potential to save many businesses that haven’t yet made it over the hump. Understanding the schemes: setting clients up for success With these government schemes soon coming to an end, now’s as good a time as any to consider how you can help your clients secure funding. The Bounce Back Loan Scheme (BBLS) If your clients need up to £50,000 of working capital to get through
this rocky period, for example, to pay staff salaries or simply maintain cash flow, a bounce back loan is a compelling option. The BBLS allows a lender to provide a loan between £2,000 and £50,000, up to 25% of a business’ turnover. The government will cover the first 12 months of interest payments, while for the remaining five years the rate is set at 2.5% per annum. Around 1.16 million businesses that have lost revenue or seen cash flow disrupted due to COVID-19 have already accessed finance through the scheme, totalling £35bn so far. BBLS loans are available until 4 November through a range of accredited lenders or partners. The Coronavirus Business Interruption Loan Scheme (CBILS) The CBILS was launched to support small and medium-sized businesses losing revenue or experiencing cash flow disruption due to the pandemic. Businesses with an annual turnover of up to £45 million
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