Preparing for Business Funding
Over the last 10 days, Champion has helped a number of clients across the Group prepare funding applications for their businesses, which has spanned overdrafts, invoice discounting facilities, asset finance and term loans.
There is a common theme to the type of information that funders are requesting. As a guide, the following details would need to be provided to the funder on making an application, which includes any finance agreements being sought under the Coronavirus Business Interruption Loan Scheme (CBILS):
- What is the primary cause of the disruption e.g. Supply, Demand, Staff, Financial Market, Other?
- What is the expected income? How will you achieve this? What are the assumptions?
- What are the essential items that must be paid? What actions are the management team taking to minimise these essential payments e.g. Government support schemes, rent holidays, reduced salaries/drawings, supplier discounting, reviewing insurance policies?
- What is a reasonable level of trading that can be expected post COVID-19? Is it expected to return to previous levels and why?
- Provide a cash flow forecast, which is based on us assuming that it will take six months before normal trading resumes, and include all cost cutting measures planned within the business together with all owner and Government additional support to be received.
- Produce a second cash flow forecast assuming the impact of COVID-19 is behind us e.g. the following 12 months based on the hopes that normal trading resumes OR amend accordingly whereby ongoing trading is expected to be positively or negatively affected following the initial six-month period as described above.
- Detailed commentary surrounding both sets of assumptions and the two cash flow forecasts.
- A personal financial profile confirming current liabilities and expenditure.
- Latest annual accounts.
- Management accounts up to 29/2/20 (if available).
- Confirmation of whether you wish to apply for an overdraft or a loan and the term you wish to apply for.
- Owners contingency plans post COVID-19.
It would be wise to begin preparing as much of this detail as possible if you are considering applying for any funding support.
Please contact your Champion advisor for help with this.
Without doubt, the most significant economic measure launched last week by the Government was the Coronavirus Job Retention Scheme (CJRS).
Most likely your business is already considering the furloughing of employees. These are unprecedented times, and here at Champion, we believe it is important to retain open lines of communication between you and your team and to explain to them the prospect of furlough.
Part of the furlough process involves the need to identify affected employees as “furloughed workers”. It is important to check the employment contract for each employee you intend to furlough and to notify the designated employees that they are furloughed.
You need to let them know whether you are topping up their wages or if they will simply receive the 80% reimbursed by HMRC/£2,500 per month, whichever applies.
This must be confirmed in writing and written consent obtained from the employees affected. If you have any concerns, you should seek legal advice.
We are not employment lawyers, nor HR experts, but we have been asked by numerous clients if we have any example letters that can be appropriately adapted for use by their business. If you would like to receive copies of these templates, then please contact your local Champion office.