From this week, companies are now able to apply for the Coronavirus Large Business Interruption Loan Scheme (CLBILS). Specifically, the new scheme provides funding to mid-sized and large UK businesses with turnover above £45m – the upper cap for the existing smaller-business focused Coronavirus Business Interruption Loan Scheme scheme (CBILS).
Under the scheme, a qualifying business can access up to £50m of financing if turnover is over £250m and £25m if turnover is less than £250m. All facilities are supported with a government-backed partial guarantee for the loan repayments, interest and fees. The initiative aims to encourage greater lending and financial support to UK businesses that have seen their income and cash flow disrupted by the crisis.
This additional measure follows a range of significant announcements to support businesses through this unprecedented period – a summary is provided below. To expedite access to this support, the government has decided to channel these measures through more than 60 accredited lenders and partners, including all the major UK banks.
The British Business Bank (BBB), which manages the CBILS and CLBILS schemes, is accepting applications for new lenders to join and Investec has been approved for accreditation for the CBILS program. Investec is working closely with the BBB to fully operationalise the scheme to help small and medium-sized businesses across the UK.
Below is a summary of the other key measures announced by the government in recent weeks to help support businesses and the economy in response to the growing threat coming from the coronavirus outbreak.
Please check the appropriate government websites for details of the full range of support measures available and information on eligibility and how to access them. Given the rapidly changing nature of the Covid-19 outbreak, information and advice from the government can change quickly. Please check these sites regularly to ensure you have the most up-to-date information:
In this turbulent time, businesses face widespread supply chain disruption. A range of factors must be assessed throughout the chain to help ensure business continuity. Availability of stock may drop, and businesses may see fluctuating component costs. This impacts importers as well as exporters. In some cases, companies may see protracted delays in supply lines.
In this case, have contingency plans been explored? Can you call upon alternative suppliers or manufacturing centres? How quickly can you adapt your supply chain, and how will this impact the bottom line?
If your supply chain is impacted, it is essential to speak with mission-critical suppliers, understand the impact on their businesses and set in motion a contingency plan.
New supply chain partners may have different methods of operating, and if you do not have an established relationship, they may seek advance payment or bank guarantees. Businesses should also review contract liabilities and assess any potential impact from cancellations, supply freezes or ongoing delays.
If your supply chain is impacted, it is essential to speak with mission-critical suppliers, understand the impact on their businesses and set in motion a contingency plan.
Cash flow is the lifeblood of any business. During this difficult period, we are acutely aware that companies must ensure healthy levels of cash flow to keep supply chains moving.
In volatile conditions, you will want greater certainty that you will get paid if you are the seller and that you will receive what you have ordered if you are the buyer.
If your business is experiencing decreased levels of revenue, income or cash flow, the good news is there are measures you can take to ensure business continuity. Financial services providers can help you access a range of solutions to give you greater flexibility in terms of your cash flow and working capital.
If you are facing potential disruption, a key source of support is the flexibility of your working capital strategy. One key element of a dynamic working capital strategy is cash flow funding via invoice discounting.
Through this method of receivable finance, your business can efficiently release cash from unpaid invoices.
At a time of financial and economic stress, CFOs, treasurers and financial directors must ensure cash and liquidity is managed efficiently across the whole business and its supply chains. This means setting in place a cash management and treasury policy that is aligned with individual company risk tolerance, while ensuring the business is strategically unlocking flexibility and liquidity where possible.
There are a number of questions companies should be asking themselves about their cash management strategy amid the current turbulence, including: When was the last time your treasury policy was reviewed? Are you comfortable with the credit ratings and capital position of your banks – should you look at diversifying?
The disruption to supply chains has been exacerbated by elevated volatility in currency markets, meaning now is a good time to evaluate your current hedging strategies and look at flexible solutions. For example, shipment delays can mean less clarity over the timing of foreign-exchange payments. Rising costs or loss of income due to currency shifts can impact cash flow and, in turn, cloud business forecasts as companies have less certainty.
Firms with hedges in place may also need to assess whether significant disruptions warrant action. For example, as sterling has fallen and supply chains are significantly disrupted, they must consider whether these hedges are still appropriate.
Companies should consider their foreign currency requirements. If they are experiencing supply chain disruption, they can seek to better align payments by taking into account adjusted cash flow – and by potentially adding flexibility around timings to mitigate risk around supply chain delays better.
Given the supply chain disruption, some trades will no longer be needed. If you do think you need to re-evaluate your strategy, please talk to your dealer to look at what can be done.
