In exactly four months time the British Business Bank is expected to end their Recovery Loan Scheme*, supported by the UK government. What does this mean if your business has just about survived the pandemic? And where to go from there?
1. Get out of survival mode and into proactive recovery. If your current market is still weak – eg overseas travellers – explore marketing to alternative target groups. Waiting to start full trading will not bring in cash and will hamper your chances to get a loan. Even lenders operating under the Recovery Loan Scheme will need to make sure your business can afford to pay back a loan.
2. Planning is good, doing is better. Lenders like viable business plans and sound growth forecasts but will ultimately take comfort from latest bank statements showing cash flowing in consistently.
3. Widen your scope of obtaining finance: A funding rejection by your traditional business bank is not the end. While traditional banks are tied to stringent regulations alternative funders can take a more flexible and speedy approach.
4. If your existing debt finance commitments and liquidity situation seem overwhelming, consider consulting a business recovery and restructuring specialist. They can help explore options to put your business back on track.
I believe alternative lenders will catch a lot of recovering businesses in 2022, for two reasons: For one, while lending criteria and products differ among them their scope is wider than that of traditional banks. The other reason is the larger range of loan types, from those taking the sting out of spikes in your cash flow cycle, to commercial mortgages and special finance for Management Buy Outs.
Do you know businesses that have seen their funding applications rejected by their banks? What was the reason?
This information is for general purposes only and does not constitute business advice. To discuss your requirements and explore business finance options please get in touch:
[email protected].
*) While the end of the scheme is subject to review, no date for that review has been confirmed yet.
