SME Investment readiness during a pandemic: how to access CBILS and funding support before March 31st

As we exit the second national lockdown of the year and enter strengthened Tier 2 restrictions, businesses are continuing to feel the strain of the pandemic. It therefore remains vital to know your options around the financial support that could help your business to recover and prosper post-pandemic, and how best to approach providers of finance.

MSIF Investment Manager, Sue Chambers, discusses the importance of investment readiness and how best to prepare for funding success during a time of elevated uncertainty.

Sue Chambers, MSIF Investment Manager

Knowing your options

When applying for funding, you should ensure that you have explored all opportunities for
financial support during this time.

Firstly, you should be utilising any free resource that is available to you as a small to medium-sized business. We would encourage you to approach your local chambers of commerce and business growth hubs as they have a plethora of connections to best help your business, in addition to the latest advice derived from central government sources. The Liverpool City Region Growth Platform is a great place to start for any businesses situated within the LCR as the site also includes the latest information on any localised grants that may be available. 

Be sure to check what government grants you may be eligible for as a company as well as ensuring you have utilised the Job Retention Scheme where appropriate to help both sustain your business and preserve jobs via the gov.uk website. 

If government and/or local support is not sufficient to get your business through the winter, you may want to consider a Bounce Back Loan (BBLS) if you are looking for funding up to £50,000 - or alternatively, a Coronavirus Business Interruption Loan (CBILS) if you need more than that.

If you have already taken out a Bounce Back Loan, you may be able to top this up to £50,000 and you should contact your original provider for further information. You can have either a BBL or a CBILS but not both. CBILS can also be applied for and used to repay a BBL. If you want to apply for either of these loans you need to do this before the schemes end on 31st March 2021. 

In the first instance, our best advice is to try your own bank first for CBILS/BBL support. If they are unable to help, then you can apply to other providers. MSIF as an example is able to support businesses with a CBILS loan through both their dedicated Coronavirus Recovery and Resilience Fund in addition to the Northern Powerhouse Investment Fund - NPIF Microfinance, jointly managed with GC Business Finance.

 

Investment readiness

Before you look to access external funding, make sure you have a full business plan ready – including an explanation of how your company has been adversely affected by the Coronavirus pandemic, your plans for recovery and what you intend to use the funds for.

Cash flow forecasts also need to be incorporated and be as realistic as possible. For example, if your business is connected to the hospitality and retail sector, you may want to assume that there could be a further delay before trading is back to normal. It will also be useful for a funder to see a sensitised version of your forecasts that takes account of possible further lockdowns or slower recovery – say reducing revenues (and associated costs) by a prudent percentage per month.

The cash flow forecast will serve to both highlight the amount required, building in some headroom as it is only a forecast, and help to evidence ability to meet the loan repayments. It is also important to detail any assumptions you have made in the cash flow. At a time when funders can’t get together face to face to discuss your financial workings it is crucial that you explain how you have arrived at the amount of loan you are looking for. Communication is key!

 

Benefits of funding

There are some real benefits of securing funding during this time. It can help create additional headroom and breathing space for your business, but you need to be sure to apply for sufficient funds to get through the next 6 months and beyond.

Additional funding can also help with the retention of staff and could avoid the need to retrain new staff in the future if unnecessary redundancies are made.

Of course some businesses are seeing growth opportunities during the pandemic and as long as they can show they have been adversely impacted by COVID in some way, then BBLs and CBILS can also be used for investment purposes.

Overall, you are best preparing yourself to hit the ground running when Covid restrictions are eventually eased and we can all return to ‘normality’. Now is the time for recovery and resilience.

If you are successful in applying for BBL or CBILS funding the government will cover all fees and interest costs for the next 12 months allowing you breathing space to focus on getting your business back on track. You can also use the funding to repay any delete ‘any’ existing funding if it will help put your business on a more stable financial footing, but lenders do have a limit attached to the amount they can refinance in this way.

Implementing new finance into your business

Only you, as the leader of your business will truly understand what your priorities are and where the extra funding will be needed most. This will vary from business to business, including covering business rates and rent, paying suppliers and, despite best efforts from the government, staff costs.

The key thing is to ensure that you have explored all options to make the most out of any assistance available.

By having these conversations, you are not only best preparing your business to re-start or continue to operate, but you are putting yourself in the best position possible for success when applying for additional funding. Make sure you have a clear plan of where that money needs to be deployed, to mitigate the risk of asking for too little or too much investment.

Be open and be honest in your conversations with any potential funders, during a time of continued and increased social distancing. It is imperative you include as much detail as you can to supplement your application.

Yes, there is light at the end of the pandemic tunnel but we need to be prepared for the financial challenges 2021 may present as a result.

Thinking of starting your own business? Your 5 BIG questions answered…

“I’ve got this idea, but I don’t know where to start…”. Talking about your business ideas out loud for the first time can be very daunting. There are so many questions you want to ask and so much information to unpick.

Jo Mountfort, our business advisor extraordinaire, has worked in the start-up business arena for over a decade. During this time, she has worked with hundreds of clients, supporting them to organise their thoughts and develop their business ideas. We asked her to tell us some of the top questions she’s asked on a daily basis. Here’s what she had to say…

1. “I’ve got this idea, but I don’t know where to start...”

This is probably one of the most common things that clients say to me when we have our first face to face or telephone chat. My response: you’ve taken the first step! Speaking to someone impartial about your idea is really important. Nobody is going to laugh at you. What we will do is help you break it down bit by bit to see if it could work. We can offer 1-2-1 support and a range of training and networking courses to get you thinking.

2. “Do I have to write a business plan?”

No, is the short answer, but you really should! Certain establishments may require to see one – banks, funders etc. But more than that, taking the time out to plan something that could potentially be the biggest step of your life is a no-brainer! A business plan is your handbook to business and is a hugely useful tool. In the start-up research stage it acts as a checklist to all the things you need to think about. There are many different formats that a business plan can take so don’t shy away. The truth is, if you’ve been thinking this idea through then you’ve already started the business plan in your head.

3. “Is there any funding available to help me start?”

Possibly. There are some pots of money available to new businesses but they are often subject to credit and other checks. Some people’s circumstances can make them eligible for financial support but this is something your advisor can support you with. As advisors, we know what funders are looking for so we can do all the correct prep work with you before you submit applications.

4. “I’m going to undercut my competition when I first start-up.”

Don’t do it! Take the time to think about your pricing structure. Don’t just presume that the best way to get customers is have a price cheaper than your competition. Of course, some customers will factor price into their buying habits but not all will. Quality and standard of service will go a long way…

5. “Do you think it’s a good idea?”

This is a really difficult question to answer and it’s not up to us to judge what’s ‘good’ or not. But honestly, I think it’s always down to the individual. You can have two people running exactly the same type of business but running them very differently. Our job is to encourage you to research and think objectively about your idea to help you come to your own conclusion.

Our support is offered via the Enterprise Hub programme which is designed to help explore ideas and develop enterprise skills. We’ve seen and heard it all. So don’t be shy, get in touch and let’s start talking about your business! Or, if you’ve got a friend or a family member who could benefit from an initial chat, tell them to get in touch!

Contact enterprisehub@thewo.org.uk or call 0151 706 8113 for an informal chat.