As we all try to get to grips with the effects of the coronavirus, here is what we currently know is happening with business banking support.
Any business owners experiencing cash flow difficulties or concerns, in the first instance should contact their relationship manager.
All banks are offering support where possible in a range of ways including:
– no arrangement fees for increased borrowing
– capital repayment holidays
– increased prepayments on invoice discounting facilities
– allowing customers to break fixed rate deposits to access funds
Speak to your bank to see what support might be available.
The Coronavirus Business Interruption Loan Scheme (CIBLS) offered by the British Business Bank (announced in the 2020 March Budget) is being finalised and full details will be provided shortly (early next week hopefully, keep checking the website). Key details are as follows:
– This is a loan scheme, funding offered is not a grant
– The loans must be underwritten, and banks will need to ensure that businesses understand this and that they are ultimately responsible for repayments, despite the Government guarantee
– Serviceability will need to be demonstrated, the same for any request for additional funding from a bank
– As such, not all requests for funding under the scheme will be approved
Other useful tips for clients around managing cash flow include the following:
– Remember cash is king, prepare a short to medium-term cash flow forecast and update daily, block any unnecessary spending where possible
– Focus on your working capital requirements and expedite your debtor collection
– Use the forecast to establish what your cash burn is and the likely additional funding requirement over the next three months
– ‘I might need to borrow X’, compared to ‘how much can I borrow?’ is a more useful conversation starter with your bank
– Be proactive, speak to your bank and other funders, the more notice you can provide them of cash flow difficulties, the more likely they are to be able to assist you
– Potentially speak to alternative funders, although this may be more expensive debt, these funders may be able to turn around requests quicker and provide additional funding compared to traditional sources
– Investigate all Government support being offered, such as business rates relief, HMRC ‘time to pay’, cash grants, statutory sick pay relief and Government guaranteed loans (click here to read our recent blog which covers this in more detail).
All banks are reminding customers to stay alert, as fraudsters may try to take advantage of the current situation, so be on the lookout for anything suspicious, including messages from your bank about coronavirus. Banks will never ask for PINs or other confidential information.
A number of banks have put support packages in place, however it is worth noting that these are changing regularly. The sections below outline our understanding to date of what help the different banks are providing:
British Business Bank
This is a Government-owned business development bank for smaller businesses. Please use this link to find the details of the CIBLS mentioned above.
The scheme, which could be available in the week commencing 23 March (details have not been finalised) offers Government-backed guarantees for borrowing and support for the first six months interest payments. Most high-street banks are accredited lenders on this scheme. Full details will be provided as soon as they are announced.
Qualifying criteria to be confirmed but are expected to be as follows:
– UK based, with turnover of no more than £41 million per annum
– Operating within an eligible industrial sector (a small number of industrial sectors are not eligible for support – this can be viewed on the British Business Bank website)
– Able to confirm that they have not received de minimis state aid beyond €200,000 equivalent over the current and previous two fiscal years
– Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements
The last point is key. The borrower always remains 100% liable for the debt and the banks will need to ensure that the request for borrowing is fundamentally sound and meets normal lending criteria, so this scheme doesn’t guarantee an approval for lending.
The message on Barclays’ website directs customers impacted by the coronavirus to contact their dedicated helpline on 0800 1971 086. This line is open from 8am to 8pm. Alternatively, customers can contact their relationship director.
Start dialogue early and have a cash flow forecast prepared if possible is the message from the bank.
Barclays will consider requests for increased borrowing on a case by case basis, in line with normal lending criteria, but are looking to support customers where possible.
HSBC has allocated £5 billion to help businesses in need of support. The bank is proactively contacting customers to see what help their businesses need. The customer helpline for this can be reached at 0800 121 614.
The bank is fast-tracking new video technology so that relationship managers can proactively contact customers to offer help in a more personal way. Relationship managers can discuss with customers:
– Repayment holidays to free up cash within the business
– Reviewing overdrafts or trade loans to allow stock to be held for longer
– Providing trade finance solutions to support customers with their supply chain
How assistance will be provided is very much dependent on a case by case basis.
HSBC are also warning customers to be vigilant for fraudsters trying to take advantage of the coronavirus outbreak.
The Lloyds business banking website page has dedicated information on coronavirus, setting out the support they are providing to customers. The main advice is to speak to your relationship director at the earliest opportunity.
In summary, areas where Lloyds have indicated it may be able to help include:
– No arrangement fees for new or increased overdrafts
– No arrangement fees for new or increased invoice finance facilities
– In certain circumstances, capital repayment holidays to be provided to businesses most impacted
– Allowing customers to break fixed rate deposits
NatWest / Royal Bank of Scotland
For any clients that bank with NatWest / RBS Group who may be impacted by the current scenarios, in the first instance they need to speak to their normal Bank Relationship Manager for support.
The Group’s publicly announced support is as follows:
– An extension of £5bn to the fund focused on the provision of working capital support that meets the needs of SMEs
– Loan repayment holidays and temporary emergency loans with no fees
– A team of Relationship Managers based in communities across the UK who will proactively speak to business customers offering help and support as they form their plans to mitigate the impact of coronavirus
– A team of locally based Business Growth Enablers will work with their external networks to distribute information to businesses on coronavirus preparedness
– Continued work with the Government, British Business Bank and UK Finance to understand the evolving impacts and appropriately support SMEs
– Have a proactive outreach to those SMEs that may be experiencing short-term trading issues due to coronavirus to ensure they are able to access the best possible range of support
– Through NatWest Mentor, the provision of consultancy and advice to help support businesses. This can range from employment law and HR advice, to health and safety and environmental management consultancy
The banking group have outlined some useful FAQ’s that offer clear support for customers and their employees, you can use this link to access them.
The bank is committed to helping its customers through these uncertain and disruptive times. If you need to talk to the bank about how coronavirus is impacting your business, you can speak to a local relationship manager, call 0800 731 6666 or visit their website.
Santander has also provided a list of useful tips for their customers, some are listed below:
– Extra support will be available in branches, but customers can also contact the bank via phone, online chat and social media
– Make sure you’re registered for online banking and have all the apps downloaded
– Stay alert to fraudsters
– Keep yourselves updated on Government support and guidance
Virgin Money (Yorkshire Bank)
The message from Virgin Money is that the bank recognises that cash flow may be disrupted in the current environment and it is committed to providing support for customers while they implement their contingency plans.
A range of options to help these customers, include:
– Payment holidays
– Emergency loans
– Overdrafts or overdraft extensions
They will also continue to view funding requests favourably, provided the underlying business remains sound.
Contact your relationship manager for further information on the support available as this message is expected to be updated over the next 24 hours, including additional support with a COVID-19 Q&A document.
We can help
We understand that this is an extremely worrying and difficult time for all UK businesses. PM+M is continuing to advise and assist businesses in navigating their way through these uncertain times. We are here to help, should you need any assistance with your funding arrangements, please contact Jim Akrill using the button below.
This information is correct as of 20 March 2020. This blog is for general guidance only. Recipients should not act upon any of the information provided without seeking specific professional advice tailored to your circumstances, requirements or needs. Please contact PM+M before making any decisions based on any matters relating to this blog.