After 3 months of COVID-19 and during this response phase to the attack, how have some of the finance packages the government put in place been responded to by businesses in the UK. Apart from the premises business rate related grants and the job retention scheme, some of the other popular funding support schemes that businesses have responded positively to are:
Has this been a load of hype or have they been accessible real solutions. How have they done so far?
1. CBIL Scheme - Loan The overall approval rate for the CBIL Scheme remains at 50%. That means 50% failure rate so far. Its also means that those that applied and were not able to access it may need other forms of support. Don’t assume that failure means they are not viable businesses, absolutely not. The government needs to be thinking of other solutions for this large group of businesses as they have an impact on local economies and employment and if they run out of cash, they won’t be going down because they are not profitable or credible businesses, but because they have not had the right bridging finance to get them through this torrid time.
The average CBIL loan size has been £194,000 since the commencement of the Scheme. In more recent weeks after the initial rush, the volume of applications has reduced significantly. This may be due to the bad press and the decline rate of this scheme. Nevertheless, the repayment terms and rates are extremely attractive and between 2.5% and 9.8% depending on individual business circumstances.
2. BBL Scheme - Loan The average Bounce Back Loan amount remains at the £30k level – One cannot assume that every borrower is applying for the maximum 25% of turnover, however, the anecdotal evidence is that the scheme is helping the micro and SME market. Some sole traders have had problems, especially when they don’t have business accounts or if they do not bank with one of the approved providers. Sterling and Tide have been a life saver for some micro and sole trader businesses, but others have not had such luck, even when producing all the required documents.
The 80% approval rate and the £20bn+ total lending via the scheme is a huge injection of capital into SMEs and should help with the local economies of where they are based. It should also help with their long term sustainability. The interest and repayment terms are extremely attractive, that applying for it is nearly a no brainer.
3. SEIS Scheme - Grant This scheme has so far seen 2.3 million claims worth £6.8 billion since it opened for claiming in April. The scheme will be extended - with those eligible able to claim a second and final grant capped at £6,570. Unlike the original claim of 80% of average monthly trading profits, this extended grant will be worth 70% of their average monthly trading profits, paid out in a single installment covering three months’ worth of profits and capped at £6,570 in total. This has been of immense importance to self-employed business people who have struggled over this tough time.
Individuals can continue to apply for the first SEIS grant until 13 July. Under this first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single installment covering three months’ worth of profits, and capped at £7,500 in total.
4. Future Fund and Innovation – Grant and Loan This funding targets some of the most dynamic sectors of the UK economy – ranging from tech to life sciences. The government has committed an initial £250 million in funding towards the scheme, which will initially be open until the end of September 2020. The scale of the fund will be kept under review. The £750 million of targeted support for the most R&D intensive small and medium size firms will be available through Innovate UK’s grants and loan scheme. The Future Fund will provide convertible government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. There have been some challenges with the eligibility criteria for some tech companies as match funding is partly a requirement for some of the loan and also a minimum investment of £250k needs to have been made in the company in the last 5 years.
For more details on any of these click on any of the links above.
If you want some help for your company with regards to the above or you just want someone with the required knowledge and experience in business to guide you on other related matters, please connect with our business advisers at RBSS Consulting Ltd in Romford on 0333 355 1696 or direct on 07796 800 187 or drop us an email. We provide real business solutions for start-ups and existing micro and small businesses in east London and Essex.
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