Finance raising concerns after the unwinding of COVID-19 schemes
The lending markets are currently in a state of flux, with mainstream banks reluctant to consider new lending opportunities and second tier lenders amending appetite in the face of extreme volatility across markets.
Alongside the inevitable increase in indebtedness from tax deferrals and government supported debt facilities, those seeking new finance or those looking to refinance should ensure they approach such a task with a robust plan.
The return of the Crown Preference as from 1st December 2020 will also compound these issues, with this legal change set to have an inevitable impact upon debt providers, particularly those reliant upon floating charges, due to the dilution of the security now available. This could mean a contraction of appetite from lenders and a scramble for security, with personal guarantees and the pledging of owner / Director assets a potential consequence of this.
Therefore, for those looking at their liquidity and balance sheet capacity, it is essential that any requests for finance are made with the provision of a detailed business plan which covers obvious areas such as the business background, management team structure and financial performance; but also with additional detail to underpin and appraise business asset pools and any action taken during lockdown.
Funders will undoubtedly assess business viability and debt serviceability on a basis which captures all new debt, both government supported or otherwise, as well any tax arrears which may exist following the use of deferral provisions made available.
MHA Tait Walker have a wide reach to over 100 funders and can assess your funding options, as well as critiquing your business plan.