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Thinking beyond the here and now – CBILS and medium-term planning

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In these unprecedented times there has been great focus on the support available for businesses to help navigate through the economic impact of COVID-19. But equally business owners and management teams need to be proactive in planning beyond the pandemic.

The present

Over the recent weeks the UK government has announced a number of government backed schemes to support businesses and the economy. At Mercer & Hole we have created a COVID-19 Business Support Hub, with our primary focus being on supporting our clients through these uncertain times.

Being a corporate financier, of particular interest to me and my clients, has been the Coronavirus Business Interruption Loan Scheme (CBILS), this scheme has been set up to support SME businesses to access lending during the Coronavirus pandemic.  Like with any new government backed lending scheme the client experience and the ease that facilities are being agreed is still evolving.

My key tips to help clients secure the funding they need are:

  • keep the application concise and easy for the bank to understand
  • demonstrate the business is ‘viable’: the borrower needs to convince the lender that the business was viable before the crisis and that it has the ability to be so after
  • show all other forms of relief have been used (for example the Coronavirus Jobs Retention Scheme)
  • focus on business critical payments: these are loans to cover costs of keeping a business alive rather than a grant
  • demonstrate how the business will operate out of the crisis when restrictions are lifted and that the loan can be repaid

A final key point on CBILS, it appears that currently the banks are still focusing on applications from existing clients. Therefore, it is extremely important to get the application right first time. That being said we have a wide network of contacts and can introduce clients to other potential lenders, be it other main clearing banks, ABLs, or alternative lenders

We are supporting clients in many ways regarding CBILS, including:

  • initial assessment to help clients understand if they are eligible
  • modelling assistance and support/challenge on key assumptions in financial models
  • assisting with the preparation and completion of the application

For assistance with applications to the CBILS scheme or discussions about ongoing funding requirements please do not hesitate to get in contact.

Thinking beyond the here and now

Whilst the government backed schemes will support businesses in the short term, business owners and management teams also need to be proactive in planning beyond COVID-19.

As the country prepares for an easing of lockdown over the coming weeks, a return to partial trading and gradual withdrawal of government support initiatives, could be a period which is equally tough to finance. We are working with clients to ensure that, as far as possible, their businesses are financially prepared to capitalise on opportunities that present themselves.

In order to achieve this, one of the many challenges business faces is the ability to look beyond the immediate financial and operational challenges to plan for the medium to long term. This includes developing realistic forecasts and models which can be adjusted to reflect potential ‘new normal’ scenarios, to ensure that funding gaps are highlighted, and finance sought which is sufficient to overcome the challenges which will arise over the medium term.

Should you need help to consider the medium-term plan for your business, to build or assess financial models, or to consider how to fund projected shortfalls identified in your business model, we are here to help.

Mike orton corporate finance director

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