Chartered management accountant Susie Kevern of Pound Lane Financial Management offers advice on accessing government assistance schemes – download from poundlane.co.uk/covid-19/
The Government has been quick off the mark to launch support packages to help businesses survive the COVID-19 disruption, but in recent days the news has featured criticism of how difficult it is proving for small businesses to access these support schemes.
Initial reports suggest that only 1,000 loans have been approved despite enquiries topping 130,000. This has led to the Chancellor announcing an overhaul of the guidance to encourage banks to lend, but the best way of ensuring success in any application is to prepare thoroughly and provide as much information as you can first time around.
We are currently supporting a number of businesses with their loan applications so here are our tips on what to include in your application:
1. What support do you need?
The CBILS scheme is actually just government backing for standard bank overdrafts and loans so think carefully about ways to reduce your business spending in order to reduce the potential loan you will need.
There is a raft of new measures to consider: furloughing staff, deferring VAT and requesting payment holidays, amongst others.
2. Make your case
The days of bank managers who keep in regular contact with your business are long gone so be prepared to give the bank an introduction to your business; include your last set of accounts, your most recent management accounts and a summary of your recent successes and future plans.
Think of this as a sales pitch; make the bank manager want to back you.
3. Outline the effects of the disruption on your business
The bank will want to see the effect on both your profitability and your cashflow, over the next 3-6 months. A cashflow forecast is essential for this – now, more than ever, cash is king.
As well as the numbers make sure you explain what changes you expect in words. Every business will feel the effects differently so you can’t expect the bank manager to know this already.
4. What will your business look like after this is over?
Do you expect some of your customers to disappear? Can you capitalise on the changes you’ve been forced to make? Are new markets suddenly open to you?
Most importantly you need to extend that cashflow forecast to (ideally) show the bank that you expect your recovery to allow you to repay the loan that you’re applying for.
Finally, remember to state clearly how much money you want to borrow based on the forecasts above.
A more detailed guide to accessing government support is available on our web site, along with a range of other useful tools and information.
Download Susie’s fact COVD-19 factsheet from poundlane.co.uk/covid-19/
• Details 07801 199671 or visit poundlane.co.uk/covid-19/