Raising finance to grow your business is not about today, it is about tomorrow. The right finance package can be a positive force within your business, one which can be used to propel your business forward.
Building a bigger, better future… that’s what we do
When you’re looking for finance to grow, a lender will want to see a well constructed Business Plan. A great Plan sets out a clear vision for the future, a future in which you soar above your competition.
The whole process of raising finance can be a distraction and divert your attention away from what’s important. With mounting priorities it’s a case of which one has to wait. Typically raising finance is one task that can grind you down.
Opening this Business Finance Bulletin, after being the key source of finance for 12 months the final figures are out for the Bounce Back Loans and CBILS schemes. The figures reveal the extent of finance taken on by businesses and now it is payback time.
For start ups and smaller businesses getting on the ladder to build a credit score can be difficult, but a new service announced by Tide Bank will ease this problem. Tide’s Credit Builder is designed to help smaller businesses create a credit footprint thereby making future access to finance easier.
To close, we review the latest figures from the Finance and Leasing Association which reveals a significant return to usage of asset finance facilities such as leasing and HP. This is a good sign of the continuing return of confidence among businesses.
On 6th April the Recovery Loan Scheme was launched. Replacing the Bounce Back Loan and CBILS the new scheme is designed to support businesses in need of growth funding. We look at how the scheme works and how it could benefit your business.
As businesses focus on getting back on track no one can ignore the level of debt firms accessed in 2020. We review a report from UK Finance which lays bare the extent of debt businesses have taken on and how some owners are beginning to worry about their ability to start repaying.
To close this Bulletin, news from Metro Bank on a new addition to their mobile banking app. The function will allow users who don’t wish to use an online accounting software package to create their own branded invoices.
Here also is the transcript of this edition of the Business Finance Bulletin
In this Bulletin, the Recovery Loan Scheme launches. Could it help you get back on the path to growth? Businesses, borrowed a record amount in 2020, but now it’s payback time. And Metro bank helps its clients manage cashflow better by launching a new invoicing tool. All of this in the latest Business Finance Bulletin
Recovery Loan Scheme Launches
Well, finally, the Recovery Loan Scheme has been launched. On the 6th of April lenders opened the doors to applications under this new Recovery Loan Scheme. This scheme of course, is a replacement for CBILs and Bounce Back Loans, which closed for applications on the 31st of March. So will this new scheme allow you to get back on the path to growth? Well, let’s take a look at what the scheme entails.
First of all, if you’re looking to borrow via an overdraft facility or a loan, the starting application amount is £25,001 up to a maximum amount of £10 million. If you’re looking for finance via asset finance or invoice finance, the starting amount is as low as £1,000. Again, up to a maximum of £10 million. How long can you borrow for? Well, for an overdraft or an invoice finance facility, you can have that over three years. For loans and asset finance, the maximum term is six years. So a good lengthy term in which to manage your monthly repayments.
So what can you use the money for?
Interestingly, the scheme says you could be eligible to apply if you’ve been impacted by COVID. Now it doesn’t say negatively impacted by COVID, so the implication is, of course, if you’re one of those businesses that has boomed in the pandemic, you’ve seen a surge in sales, you may need additional working capital, buy new machinery, or plant and equipment. That means you will be eligible under the scheme. So it’s a much more positive forward looking scheme other than like CBILs and Bounce Back Loans, which is very much about survival money. The new scheme is about growth money.
In terms of the interest rates, that’s still now being capped at 14.99%, including all of the fees that the lenders will be charging. So at least there is an upper cap, but lenders of course, will be free to set their own interest rates.
Now, in terms of repayments, unlike CBILS and Bounce Back Loans, you have to start paying from day one. In fact, your first payment wILL come one month after you’ve drawn down the loan. So you have no moratorium here and you were responsible for all of the costs on a day one. So a good scheme, and it only lasts until the 31st of December. You really need to be very focused and get your applications in.
At the moment as I record this, there are only 18 lenders who have been accredited by the British Business Bank. I know there are other lenders in the pipeline looking to apply, and this compares to over a hundred lenders across the CBILs and Bounce Back Loan scheme. There’s probably not going to be as much appetite amongst lenders to support this scheme, but still it would be a good variety of lenders for you to choose from.
If you want to know more about this scheme and how it can work for you, always happy to have a chat, just drop us an email info a business loan services dot co dot uk
Business Borrowing in 2020
On many occasions over the last 12 months, I’ve highlighted the fact that businesses have had an insatiable appetite to borrow money. It’s not surprising given what’s going on with businesses, just needing funds to keep going or to plug the cash flow gaps. Well, this demand for finance has been highlighted in a new report from UK Finance.
UK Finance is a trade body for all of the UK lenders and it’s reported in its latest Business Finance Review that in 2020 lenders said that they lent new money, new money out the door, totaling £63.6 billion; just under £64 billion of new finance arrangements. Now that’s a staggering figure on its own. However, compare that to the new loans they issued in 2019, a normal year. Well, the increase in 2020 was 162% on the previous year. Yes, a 162% jump in new financial arrangements. So it just shows the level of that the businesses have now taken on.
In fact, the report highlights that a quarter of business owners are now saying they are beginning to panic a little bit, because these repayments are obviously going to be starting now during April, May and June for the majority of businesses. So they realise now the level of that, that they’ve taken on, which has to be paid back.
Now, this new debt that’s been taken on, not only is it new money, but it’s also diverted it from other financial products as well. The Finance and Leasing Association, for example, have just released figures to the end of February, 2021, which shows a demand for asset finance, being leasing and HP volumes fell in the 12 months to February, 2021 by 24% compared to the previous year in February, 2020. So it just shows a combination of two things. The demand for asset finance generally has fallen because businesses just weren’t investing. But also there’s an element of the fact that they had CBILs and Bounce Back money. And so it didn’t need to access asset finance facilities.
So we can see there’s a lot of problems that are going to be facing businesses during this year, as I’ve mentioned in the previous segment, we’ve got the Recovery Loan Scheme, which may help plug further gaps, but of course, we’ve now got this huge lump of debt, which needs to be paid back.
Metro Bank Invoicing Tool
Over the last few years we’ve seen a rapid increase in the number of businesses that are using a large variety of online accounting software packages designed to make accounting that much easier. Well, not really. They’re very small businesses out there who perhaps don’t want to get tied into a monthly subscription, or really just don’t do large volumes to justify the cost of packages. Well, Metro bank has recognised that, and this and has now announced that it’s launching an invoicing tool to sit alongside their mobile banking app.
If you’ve got an account with Metro bank, and you don’t do large volumes, you can now create an invoice within your mobile banking app. You can create an invoice, assign it to a particular customer, assign it in terms of one of your particular products or services, and also even branded up with your logo. So you’re going to issue the invoice direct via the app.
The customer receives it. They pay you back into your Metro bank account, and then you can reconcile you invoice versus what you’ve had paid back in. It will allow you then to keep track of your cash flow and more importantly, chase those people who haven’t paid.
So it’s a great idea for Metro bank for those smaller businesses who don’t want the all singing, all dancing, accounting software packages. If you want to know more about that, you can find out more from the Metro bank website, which is www.metrobankonline.co.uk/business. A great, innovative idea from Metro bank.
Well, let’s it for another Bulletin.
I hope you enjoyed watching and listening to it. And if you did, please, don’t forget to give it a like, a share and subscribe to this channel. So thanks very much. Look forward to being with you again, next time.
We devote the whole of this week’s Business Finance Bulletin to the new Recovery Loan Scheme.
In his Budget last week, the Chancellor announce that CBILS and the Bounce Back Loan Scheme would not be renewed but instead would be replaced by the Recovery Loan Scheme.
We look at features of the new Scheme; the key differences between it and CBILS and the Bounce Back Loan; and the actions you should take now in terms of the 31st March deadline for the existing schemes and preparation for the Recovery Loan.
As the application deadline to apply for a Bounce Back or CBILS loan fast approaches, there is talk of a new government-backed loan being announced in this week’s Budget. Focusing more on recovery than survival we consider what the features of the loan could be.
Smaller, local businesses have been badly hit over the last 12 months. We look at a pilot scheme launched by Barclays Bank in four UK towns. The Rebuilding Thriving Local Business programme designed to equip small business owners with the skills to restore their businesses.
To close, a review of the latest Lloyds Bank monthly Business Barometer survey which reveals that business is slowly edging up to highs not seen for nearly a year.
What is the business borrowing environment going to look like post Bounce Back Loans and CBILS? Opening the latest Business Finance Bulletin, we look at why obtaining finance will be challenging once the government loan support schemes finish.
After two years in the making, seven of the major banks have launched the Business Banking Resolution Service. The service provides a path for small businesses who want an independent body to review complaints they have against their bank.
Wrapping up this edition, if you deferred your VAT payment due between March and June 2020, we look at HMRC’s announcement that it will be opening up applications to pay the amounts due over 11 months.
The Insolvency Service has reported on the number of firms which entered some form of insolvency arrangement in 2020. Opening this Bulletin, we look at why the numbers are lower than 2019 and how the tidy is beginning to turn.
We look at the latest CBILS and Bounce Back Loan figures which reveal that demand for the support loans are still strong. The figures also show that topping up an existing Bounce Back Loan has proved popular.
To wrap up this edition, we review a report from Small Business Britain and TSB focused on the actions small businesses have taken to become more resilient in 2021.
This edition of the Business Finance Bulletin is a Bounce Back and CBILS fest! We kick off with the news that following a raft of new restrictions the government has extended the application deadlines for all the loan support schemes.
The swift roll-out of the Bounce Back Loan scheme has been criticised by the Treasury Select Committee stating that the balance between protecting taxpayer’s money and supporting business is wrong. We look at what their concerns are.
To close, a review of the latest Bounce Back Loan and CBILS figures which show continued growth and demand from businesses in need of cash support.
This episode is devoted to developments within the CBILS and Bounce Back Loan government support schemes. Given the ongoing economic problems, we kick off with a look at the Chancellor’s announcement that the CBILS and Bounce Back Loan application deadlines have been extended. Is it time to re-look at your borrowing requirements?
We look at the latest figures from HM Treasury on how much has been borrowed from the two main support schemes. The amount of money borrowed is a significant sum and signals a tough 2021 for many businesses when it comes to repaying these loans.
To close this Bulletin, we consider some of the unintended consequences of the CBILS and Bounce Back Loan schemes in term of future availability of finance and capacity for businesses to borrow.
On 22nd July HMRC’s status as a Preferential Creditor in insolvency situations was restored after nearly 20 years. Could this have an impact on the cost of obtaining business finance and the appetite of lenders to support businesses?
As growth in the economy begins to kick back in, many businesses are a long way off in settling into a new routine. To take the pressure off, calls are being made for the government to extend the temporary moratorium on Wrongful Trading which is due to be lifted at the end of September.
To close this Bulletin, we review the latest CBILS and Bounce Back Loan figures which continue to provide a financial lifeline to businesses.
You can also read the transcript of this Bulletin below…
Changes to HMRCs ‘s creditor position in an insolvency; calls to extend the deadlines on the government support schemes; and I look at the latest CBIL’s and Bounce Back loan figures. All of this in the latest Business Finance Bulletin.
Let’s start this Bulletin by having a look at the little known change came into effect on the 22nd of July, which could have an impact on the cost of unsecured business borrowing. So what was that change? Well, on the 22nd of July, the Finance Bill passed through Royal Assent. In that Finance Bill was a change to HMRC ‘s creditor position as regards where it ranks when payments are due to it under an insolvency situation. We need to wind this back to before 2002.
Before 2002, HMRC had a preferential creditor status. If a company went into insolvency, HMRC in respect of PAYE, VAT and National Insurance contributions, would have a first call on funds ahead of other unsecured creditors. However, via the Enterprise Act of 2002, their position was downgraded and they sat alongside other unsecured creditors. So money was shared out equally. The government, obviously is looking to increase his tax take. In 2018, it decided to reverse this position, making HMRC again, a preferential creditor. What kind of impact is this having in terms of business borrowing? Now we’ve got the position where, as before, HMRC can now take first call in respect of VAT PAYE and National Insurance.
That means essentially there’s less money now to share out amongst the unsecured creditors. So that’s going to put them in a worse position. From a business banking point of view, that’s obviously is going to be a concern. If you’ve got a Debenture which captures stock and other assets, now there’s less money to go around to secure and satisfy that Debenture. The impact’s going to be that it’s going to make borrowing potentially more expensive or take away and dampen further the amount of appetite that banks have to lend to businesses. So it’ s a little known change, but it potentially could end up costing you a bit more money when it comes to borrowing on an unsecured basis,
As businesses start to open their doors again and get back to a semblance of normal trading, t here are calls now being made for the government to extend certain elements of the support that they provided businesses over the last couple of months. Now, one area that is being called for an extension is a change that was made via the Corporate Insolvency and Governance Act early this year. Under this Act, the concept of Wrongful Trading has been temporarily put aside. What I mean by this and I’ve covered this in previous Bulletins, Wrongful Trading is where as a Director, if you knowingly enter into a credit agreement, when, your business is insolvent, you could actually be accused of Wrongful Trading. The government thought that this isn’t right during these turbulent times, and so they put a temporary moratorium on that to allow directors to take really good decisions in these uncertain times, mindful of the fact that they would not then be prosecuted for Wrongful Trading.
That moratorium finishes on the 30th of September. RSM, a auditing and accounting and consultancy firm have written to the Chancellor last week, pleading to extend that moratorium to the end of December this year, to give another period for businesses to settle down while they reassess their model and look at how they can do business and look ahead as to what their borrowing requirements are going to be; they think it’s unfair that that 30th of September deadline is met. There are also calls at the same time for the government to further extend the CBILs scheme as well. We’ll look later on in this Bulletin, but there’s still lots of applications coming through. As we start to get back into a new normal, calls are now being made for the government to extend deadlines and provide further support to businesses. Continue watching this Bulletin and I’ll bring you updates as and when they come out.
To close this Bulletin , let’s take a look at what’s going on with the Bounce Back Loan scheme and the CBILs scheme. Figures have been released by HM Treasury and the British Business Bank as at 19th of July and their figures reveal that a total of £48 billion has now been lent out by accredited lenders. That’s £48 billion of new money that’s been pumped into the economy in order to support struggling businesses. Let’s have a look at the numbers underlying those figures. First of all, let’s look at the Bounce Back Loans. In terms of loans distributed of Bounce Back’s, there are now 1,084,153 loans; £32.79 billion has been lent out and it’s got an approval rate of 82%. So a very strong success rate.
Turning now to CBILs , which starts kicking in at £50,001 and above, not as good a numbers as Bounce Back Loans, but still really strong. Total number of CBILs loans now stand at 55,674; £12.2 billion has been lent out and it’s got an approval rate of 50%.
So not as good as a Bounce back Loan. There’s more due diligence and assessment goes into a CBILs facility, hence that success rate not being as good as under the Bounce Back Loan scheme. I’ve mentioned in previous Bulletins, you’ve got to be really aware if you’ve taken out any of these facilities in 2021, obviously your repayments will kick in.
If you’re looking to borrow money going forward under ordinary loan schemes, the banks are going to be critically looking at this new liability that will kick in in quarter one and quarter two next year; they’re going to factor those new repayments into your cashflow. Also you’ve got to be mindful as well, i f you’ve taken out a Bounce Back Loan or CBILs, then you’re kind of sending a signal that your business is not as strong and that you needed it.
Now I know many businesses that just applied for the loan because it’s such a good interest rate and why wouldn’t you. And certainly it’s there to use to help grow your business. But if you don’t need it, I would critically take a look say month 10 before your repayments kick in as to whether you actually still need it. I f you want to have a clean balance sheet are not impact on your ability to borrow money in the future. Think about paying it back. There are of course no penalties to paying it back early. So the schemes continue to be popular if you haven’t applied and you do need it, g et in there quick, all of these schemes have a finite deadline.
That’s it for another Bulletin and as ever, I hope you enjoyed watching. I f you did, please, don’t forget to give it a like and a share and subscribe to this channel. So that’s it. I look forward to being with you next time. In the meantime, have a safe, profitable, healthy week.
Opening the latest Business Finance Bulletin, we look at proposals presented by financial firms and professionals on how to ease the debt and cashflow burden facing business in 2021 when CBILS and Bounce Back Loan repayments start.
As businesses open and consumers slowing start spending, we review the latest quarterly survey from Hitachi Capital Business Finance which reveals that business confidence is slowly beginning to return, especially among small businesses.
To close, the announcement that the European Union has relaxed the Undertaking in Difficulty test means that businesses refused a CBILS loan due to an insolvent Balance Sheet can now re-apply. This is good news for businesses previously denied access to the CBILS programme.
I wanted to thank you for such an insightful, energetic, and entertaining talk at the Kevin Green Wealth event on securing funding and creating a successful plan. It was brilliantly executed and a pleasure to listen to and the ideas I’ve learned are definitely going to help me in going forward.
Max Cooper of Manchester
Further to your recent presentation at LEAD Wales just wanted to say it was very refreshing to see somebody talk passionately and positively about finance, very insightful!
Kay Hyde | Hyde & Hyde Architects
Hi Rob, it was so interesting and entertaining listening to you at the Kevin Green Wealth Coach Workshop in Reading this weekend! I didnt realise you can find Finance proposals such fun!. Brilliant tips! Thanks.
Gaz Jabeen | Bollywood Burn Out
Rob kindly agreed to attend the recent Pontypridd RFC sponsors networking evening and delivered what can only be described as an excellent talk on 5 Tactics to Boost Your Business and Your Profits. He kept the audience engaged throughout and the feedback from everyone was excellent. Rob is very knowledgeable on business and finance and on top of that is a genuine nice guy. We hope to have him back at a future event and I have no hesitation in recommending Rob’s services.
Angela Holloman-Coombes | Connective HR
Rob delivered a series of 3 workshops aimed at understanding how finance houses look at finance propositions with the aim for us as a team to deliver more of a bespoke offering to our customer base. The training was delivered to a mixture of staff who work with new businesses start-ups and existing established businesses across Mid & South West Wales. Rob delivered the training with an abundance of passion and has really helped my team look at financial propositions in a different light, many thanks again Rob and I look forward to work with you in the near future.
Shayne Yates | Welsh Government Regional Centre Service Mid Wales