To those outside the finance sector, £330bn sounds like a very large number indeed. But since the chancellor, Rishi Sunak, announced a package of support equivalent to 15% of GDP to help UK businesses struggling with the impact of the global coronavirus pandemic, companies have asked an increasing number of questions about how effective the measures will prove to be.
BOOST&Co’s chief financial officer, Edd Hatfield, is one of the people at the sharp end – continuing with business as “normal”, as the lender’s activity continues uninterrupted, while also investigating which of the government’s initiatives could provide the most valuable help. “Everyone is experiencing some sort of impact, and dealing with it isn’t easy, but it’s certainly interesting,” he says.
Government must use specialist lenders
Hatfield’s concern is for BOOST&Co’s portfolio companies, not just the lender itself, and his key message is that the British Business Bank must receive further funding from the government, for specialist lenders to distribute to SMEs (a survey published by the British Private Equity and Venture Capital Association on 26 March found that the impact of the crisis on 45% of respondents is already “very severe”).
The Coronavirus Business Interruption Loan Scheme (CBILS) is being distributed by accredited lenders including major banks, but Hatfield observes that banks tend not to pass on cuts in interest rates; indeed, MPs have warned them not to profiteer from the crisis by charging excessive rates on loans (reportedly between 7% and 12%, compared with the Bank of England’s base rate of 0.1%, a record low imposed by new governor Andrew Bailey earlier this month). “Funding banks is not the way to go, because they are self-interested; we learned this from the 2008 financial crisis,” he says.
He argues that specialist lenders such as BOOST&Co are better placed to distribute funds because banks do not have “the appetite, the staff, the design or the means to get this money to the companies that need it”. Large institutions have unsuitable systems and lack expertise in SMEs, whereas “we have the staff to make these deals and get this money into the workplace much more quickly. The only way to do this is through existing channels, using the infrastructure and relationships that have been built over time. That’s why we’re here,” he says.
Contact us for fast cash
BOOST&Co is not among the 40 accredited lenders providing the CBILS. Our fastest way to provide funding is via receivables financing. Our funding partner Growth Lending Limited operates under three brands: GapCap Limited, for SMEs needing single invoice financing or invoice financing facilities up to £5m; KX Media Capital (formerly FastPay UK), for media companies requiring invoice financing facilities up to £10m; and BOOST&Co’s accounts receivable product, for SMEs needing financing facilities of up to £15m.
These brands make their own decisions, but they are part of the same group and can all help with access to short-term financing (typically one to two weeks for simple facilities). Please contact Jack Trowbridge to discuss your options.
Log your calls and make a payment plan
Part of the frustration for companies in need of funding stems from the fact that a number of the government’s schemes are open for applications but do not have confirmed timeframes for when the money will be received. For example, the CBILS, which aims to provide facilities of up to £5m to UK SMEs, was announced in the chancellor’s March budget, but cash is not expected to be available until April.
Given this gap, it’s time to take the initiative, Hatfield says – particularly if you are struggling to get through to HMRC (“our accountants are phoning on behalf of five companies, with five phones on the table ringing at the same time”, he says). His advice? “If you get cut off, keep a log of every time you called, how long it took and what happened. Meanwhile, work out how you’re going to pay your liabilities over time and make your own payment plan. Then, when you get through to HMRC, you can work it out from there.”
HMRC isn’t as scary as you think
Having finally managed to speak to HMRC, Hatfield can offer reassurance in regard to its approach. “It was the easiest thing I’ve ever done in my life,” he says. “They want to know when you’re likely to be able to pay, but they’re also aware that no one knows the answer to that. Anyone can have a payment holiday, as long as they have a legitimate reason, and the pandemic certainly provides that – but the crucial thing is that they want you to make a gesture, not to pay nothing.
“So the message is: no matter how long you’re on hold for, call HMRC. They’re not as scary as you think; they’re so busy that they just want to put something on their system to note that they’ll speak to you again in three months. It’s good to have the discussion, and it’s not a difficult one, so I think everyone should do it,” he says.
Remember that cash is king – and be kind
Hatfield emphasises that “cash is king – that’s crucial”, echoing BOOST&Co principal Richard Hallett’s advice for struggling companies to monitor their cash flow every day. “What’s strange for an accountant is that your focus is normally on profits, but at the moment, that’s not the biggest concern. This is the new mindset – cash is the only concern for all firms right now,” Hatfield says. “Cash is everything because the one thing you have to do is pay your staff, and reassure them by paying them on time.”
It is often said that a crisis brings out the best in people, but widespread panic-buying of toilet roll shows that it can also bring out the worst. Hatfield has spoken to a number of BOOST&Co’s partners and suppliers since the UK went into lockdown, and cites two differing approaches to rented office space: one company offered to absorb the cost if he decided to stop paying for membership during the pandemic, but another insisted on continuing to charge for its services, even though using its building would contravene government guidelines.
“In a crisis, you learn which people will work with you and share the burden, and those are the people you want to continue to work with,” Hatfield says. “But it works both ways: we need to be that type of positive, understanding company, too. We have to work with our portfolio companies and be even friendlier than usual to the ones who are struggling to pay us – and that’s what we’re doing,” he says.
Can the schemes save British business?
Looking to the future, do the government’s measures have the potential to mitigate the economic impacts of the crisis? “I think what they’ve already done has gone above and beyond,” Hatfield says. “It’s amazing how much money is available, but it’s a tricky situation. The government has to make announcements about financial support to calm people’s nerves, because if it doesn’t, the result is chaos – a massive downward spiral in consumer confidence and an enormous crash. So, you have to allay people’s fears, but I wouldn’t like to be the one writing the legislation on it.”
Of course, the public-health emergency is at the forefront of the UK’s response to the coronavirus outbreak, but Hatfield is thinking positively about how lenders such as BOOST&Co can help British businesses in their hour of need. “We live in interesting times,” he says. “It’s an unprecedented situation, but you have to keep calm and lend on.”
- Contact Jack Trowbridge at our funding partner Growth Lending to discuss short-term financing
- Get a copy of BOOST&Co’s comprehensive guide to the government’s support for businesses here
- Read BOOST&Co’s guide to dealing with the coronavirus here
- Call HMRC’s dedicated Covid-19 helpline on 0800 0159 559