Opening this Business Finance Bulletin, fears of another Credit Crunch are mounting with the Bank of England calling on banks to play their part in meeting funding needs as business start gearing back up.

The latest figures from the Finance and Leasing Association reveal how demand for Asset Finance facilities has dramatically fallen over the last quarter. We look at the two factors which are driving this decline.

To close, a review of which areas of the UK have taken the most CBILS and Bounce Back Loans, and the latest figures on how many loans have been accessed by businesses in need of finance.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Google, Spotify, Stitcher or itunes channel.

You can also read the Transcript of this Bulletin below.

Business Finance Bulletin for Week of 10^th August 2020

The Bank of England calls on banks to help avoid another credit crunch; economic woes are affecting demand for Asset Finance ; and the areas and sectors in the UK that are using CBILS and Bounce Bank loans; all of this in the latest Business Finance Bulletin.

Calls to Avoid Another Credit Crunch

In a previous bulletin I mentioned that I had concerns that we may be seeing another credit crunch by the tail end of this year, and certainly in 2021. Well, it seems that the Bank of England also have similar concerns.

One of the many committees the Bank of England has is the Financial Policy Committee. That committee has responsibility to monitor and oversee risks that the UK economy could face. The latest committee report has suggested they are concerned that banks may not be there to meet the cash requirements of UK businesses.

The committee estimates that there’s probably going to be about £200 billion demand for finance as businesses come out of lockdown and start growing again. One concern is that the banks may not be there to meet that demand. Now, the committee recognises that the banks have done extremely well in supporting businesses before and during lockdown, with an estimated £70 billion of net borrowing distributed; net borrowing, means new money lent out, less money’s paid back.

Of course there are alternative sources of finance. And one thing that popped up last week, IWOCA, an alternative cashflow lender has tapped into a £100 million of funding. It has gone to all of the UK banks and said, “If you’re not happy to support your clients, we further them over to us.” We can see that the alternative finance sector is already stepping into the gap that perhaps may be left by the banks. Interesting developments, so watch this space in order to make sure that you are ahead of the game when it comes to raising finance,

That’s a huge slug of money, primarily sourced via CBILs and Bounce Back Loans. However, with this £200 billion gap, the Bank of England wants to make sure that the banks are there to meet that demand. They are concerned that with insolvencies going to be on the increase, the banks are going to be faced with even bigger losses and therefore will contract and step back from the market in order to conserve their capital. Obviously the Bank of England doesn’t want that, so it’s making an early call to banks to say, “Hey banks, we’re watching you. We want you to be out there supporting UK businesses in 2021”.

Fall in Demand for Asset Finance

Let’s move on now to demand for finance and interesting figures out from the Finance and Leasing Association. Its members are responsible for issuing facilities such as HP and leasing to finance the purchase of capital and machinery.

The figures are for June 2020 and in the month of June, 2020, compared to the month of June, 2019, the total volumes of business written by that sector was down by 41%. That just shows how big the change in the market has been. If we look at the first six months of 2020 versus the first six months of 2019 there, the drop in the volume of business was down by 32%. If we look at the last quarter, the second quarter of 2020 versus the second quarter of 2019, the drop has been a massive 49% in terms of volumes of business written, yes, nearly 50% drop.

What’s driving this?

There are two things. First of all, it’s lack of investment appetite amongst businesses. Many of them are very cautious at the moment, sitting back and watching the market and really don’t want to commit to any capital expenditure at the moment. However, on the other side, we’ve also got many businesses which do want to invest, and instead of obtaining finance have said that they are going to use funds, released via Bounce Bank loans, and CBILs loans. Yes, they’re going to use cash instead of using finance facilities. So, two things at play here.

CBILS and Bounce Back Loan Updates

Closing this week’s Bulletin, our usual look at what’s going on in the CBILs and Bounce Back Loan market. Now, before I take my usual look at the number of facilities drawn, I want to review a report issued by the British Business Bank, which focuses on areas and also sectors that have accessed these government loan support schemes.

First of all, CBILs loans outside of London and the Southeast, where many of businesses are based, it’s businesses based in the East of England that have taken out the most CBILs loans. In terms of Bounce Back Loans, again, excluding London and the Southeast, it’s businesses based in the Northwest, who’ve taken out the largest number of Bounce Back loans. If we look across the UK in terms of where businesses are registered and who’s accessed loans, it’s quite evenly spread and the numbers kind of match each other. It’s good to see a good even spread of businesses accessing support.

In terms of what’s going on in the scheme, figures to the 2nd of August have been released and in total, the amount accessed via the scheme now stands at £50.7 billion. How does this break down? In terms of Bounce Back loans, the number of loans distributed stand at 1,135,575 with £34.3 billion issued, at an approval rate of 82%.

In terms of CBILs loans, the number of loans distributed stands at 58,595 with £13.1 billion issued with an approval rate of 49%, a slight dip on the kind of average of 50%. So again, many businesses still unable to access CBILs. As I’ve mentioned over time, with the CBILs loans coming out with very low acceptance rates, don’t forget, there are many alternative providers out there who can step into that funding gap and help you out. We can see lots of businesses still accessing these schemes, but don’t forget the CBILs ends at the end of September. So, if you’re thinking of applying, you need to get in quick,

Wrap Up

That’s it for another Bulletin and I hope you enjoyed watching. If you did, please, don’t forget to subscribe to this channel and also give it a like and, a share. That’s it, and I look forward to being with you again, next time. And in the meantime, have a great successful, profitable and safe week.

We open this week’s Bulletin with a look at analysis from KMPG which reveals a jump in company Administrations in the third quarter of this year. Reflecting pressures being felt in the economy the increase is not a good sign for the remainder of this year.

Following a strong growth in 2019, the Asset Finance sector has succumbed to the lack of confidence in terms of business investment. We review the latest figures from the Finance and Leasing Association report which highlight stalled growth in terms of volumes of business being written.

To close this Bulletin, with bank charges often a bone of contention, good news from TSB of an extension of its Free Banking offer for start ups and businesses switching their banking.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Spotify, Stitcher or itunes channel.

Smaller property developers can find it a challenge when it comes to raising finance. To kickstart the latest Bulletin we look at the initial announcement from the British Business Bank on its ENABLE Build Guarantee which will focus on assisting smaller property developers access finance.

Credit4 is a niche lender supporting small businesses in need of flexible finance solutions. To allow them to back their increasing number of clients, Credit4 has announced it has secured additional funding. Could they fund your growth plans?

To close, our regular review of how the Asset Finance sector is performing. Once again, growth in volumes of HP and Leasing arrangements is beating expectations against the background of flat small business confidence levels.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Spotify, Stitcher or itunes channel.

It has taken a while since the formation of the Small Business Commissioner office for them to name and shame a late payment offender, but the Commissioner has finally called out a well-known name. With the Commissioner’s focus on tackling late payment, will naming and shaming have an impact on other offenders?

Administrative tasks are not the favoured part of running a business. We look at the announcement from mobile-only bank Starling of its link up with cloud-based accounting package provider FreeAgent, which will reduce admin time and help with speedy production of Management Accounts.

To wrap up, our monthly look at activity in the Asset Finance sector with a mixed bag of results reflecting the degree of uncertainty which many business owners are currently feeling.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.

The term Open Banking may still be a mystery to many people, but more lenders are beginning to adopt the technology and benefits it brings. We open our latest Bulletin with news that Boost Capital, the short term business finance provider, has embraced Open Banking to speed up the processing of finance applications.

New research from Experian, the credit reference agency, reveals that a high proportion of people have never checked their personal credit score. We look at why it’s important to do so, especially prior to applying for business finance. In the Bulletin we mentioned a longer video with tips on how to improve your business credit score.

To close, our regular look at activity in the asset finance sector. The latest figures from the Finance and Leasing Association show that in January, usage of asset finance bucked the trend in terms of appetite to invest.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.

We open our latest Bulletin with the announcement from Lloyds as to how much lending it will be committing to UK businesses in 2019. The funding pot will be available to all businesses but with an emphasis on those businesses looking to export for the first time.

The Finance and Leasing Association has released up to date figures on the volume of business written by its members. The level of asset finance transactions is always a good indicator of how business owners are feeling, and the recent figures are a mix of good and bad news.

To close, we look at the call from the FSB for a review of the Prompt Payment Code. This voluntary code is designed to curb late payment, but 12 months on from the Carillion collapse the FSB wants to see it strengthened.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.

With the traditional year-end slowdown fast approaching, if you haven’t done so already, now is the time to start assessing the impact on your cashflow. How can you avoid hitting a cash crunch?

The British Business Bank has announced support to another niche lender providing Asset Finance facilities to growing businesses. We look at how Compass Business Finance will benefit from being granted access to the Enterprise Finance Guarantee Scheme.

To close, our monthly review of how the Asset Finance sector is performing in terms of finance provided to small businesses. The latest figures from the Finance and Leasing Association reveal a continuing reluctance among businesses to embark upon any significant investment spend.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.

At the beginning of 2018, Open Banking was launched. Designed to improve access to finance by streamlining the application process, Liberis, an alternative finance provider, has announced its first use of Open Banking technology to renew one of its client’s borrowing facilities. The banking revolution is now underway.

Barclays Bank has announced two new initiatives to increase the level of support it provides to small businesses. Firstly, we look at the bank’s use of a £300m ENABLE Guarantee granted by the British Business Bank to boost Asset Finance usage. Barclays has also announced the doubling of its unsecured overdraft and business loan limits.

To close this Bulletin, we review the latest Asset Finance statistics from the Finance and Leasing Association. The statistics to May reveal that following a slow start to 2018, Asset Finance volumes jumped in May with strong performance in purchase of commercial vehicles and plant and machinery.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.

Are small businesses increasingly reluctant to borrow? According to findings in the latest SME Finance Monitor Report that appears to be the case. What are the factors holding businesses back from approaching lenders?

Following the Carillion liquidation, concerns continue to be expressed about how larger businesses deal with their smaller counterparts. Is there a failure in UK corporate governance, particularly when it comes to payment practices? That’s a question being posed in a consultation paper issued by the government. Do you have comments or ideas to share?

Despite the apparent overall reluctance to borrow, we close our Bulletin by reviewing the latest figures from the Finance and Leasing Association. The statistics for business transacted to January 2018 reveal steady growth in the use of this form of finance.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.

Despite many reasons for small businesses to feel uncertain about prospects, we open this Bulletin with a review of the latest Business Barometer Report from Hitachi Capital which reveals that business confidence has remained steady over the last 12 months.

One source of finance which continues to see growth is Asset Finance. Figures released by the Finance and Leasing Association shows strong growth in the use of Asset Finance in 2017 with certain types of asset purchases leading the way.

To close the Bulletin, we share news that Marketinvoice, the online invoice discounter, has announced a tie-up with trade credit insurance provider Euler Hermes. The partnership will benefit those Marketinvoice clients who wish to protect themselves against non-payment of discounted invoices.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.