Whatever it takes – beating the coronavirus crisis
Yesterday, Chancellor Rishi Sunak announced £330bn in loans, £20bn in other aid, a business rates holiday and grants. Importantly, he also promised that if all of this was not enough, he would do whatever it takes for the economy to survive against the coronavirus impact.
He will have to do more.
Business owners are faced with the unenviable task of acting quickly and decisively if they want their business to survive and dealing with funding, a cliff edge fall in demand, self-isolation and protection of their workforce and supply chain interruptions.
Hence they will follow the standard mantra of Cash is King – they must consider sources of funding, how to collect debtors and income and undertake a review of spending to prioritise business critical expenditure rather than discretionary spend.
The main lending support from the Government
The single source of new funding, as of today, is the Government. A summary of the main lending support from an SME owners perspective are as follows:
- Up to £5m loans for SMEs
- Security is Government backed
- Interest rate of 6%
- Interest rate holiday for 6 months
- Further details are to be announced in the coming days
We understand that time to pay arrangements are also available for Corporation Tax, VAT and HMRC. However, this route may only allow for a delay of one month. Whilst many businesses may elect to pay their taxes on time, they may find that one of the requirements of the loan availability is being up to date with Crown debts.
Finance directors will need to evaluate financial forecasts for the next six weeks and next six months to ascertain how much funding is required. They need to communicate this to their existing banks as early communication is required.
The Chancellor also announced yesterday that business owners will get Government support to pay for their rent, their salaries, suppliers or purchase stock. He said he was extending the business rates holiday to all firms in the hospitality sector and funding grants of between £10,000 and £25,000.
The offer of grants is very welcome for micro businesses and for those in the leisure and hospitality sector, but it will not be enough and neither will the £5m loans for SMEs. Businesses will want financial support to be immediate and to cover the substantial losses of the next few months and it may be that the grant package extends to address this problem.
You should keep watching the daily briefings and following the Government websites to get the latest details of support available.
Also, please speak with your accountants and corporate finance advisers to ask for assistance with alternative sources of funding and financial forecasting to help support your business.
Finally, with so many business owners focusing only on business critical expenditure, the reality is that many SME businesses in the UK faced with an unprecedented closure of the economy for an uncertain length of time will not survive without Government intervention. We can only hope that the Government is true to its word and will do whatever it takes.
We are here to help
MHA Tait Walker are here to help you in good times and bad, and we have taken steps to allow for home-working to ensure that we can keep helping you throughout this crisis.
You can find all of our staff direct dial numbers here: https://www.taitwalker.co.uk/wp-content/uploads/2020/03/MHA-Tait-Walker-Staff-direct-dials.pdf
We will issue regular blogs during the coming days to keep you informed.
If you have any concerns and wish to speak to us, please call us on 0191 285 0321 or email firstname.lastname@example.org. Alternatively, please get in touch with your usual MHA Tait Walker contact.