Shocking news this week on the BBC News website:

Nearly a fifth of all small and medium-sized businesses in the UK are unlikely to get the cash they need to survive the next four weeks, in spite of unprecedented government support.

The BBC said research from a network of accountants suggested between 800,000 and a million firms across the UK may soon have to close. And that this is because many firms are having trouble accessing the government’s emergency loans and in some cases the banks have refused to issue them.

In response, the banks said they are following the rules set out by the government.

But that does not seem to be the case. After all, it is already two weeks since Chancellor Rishi Sunak said that businesses would be able to walk into bank branches and discuss Coronavirus Business Interruption Loans (CBILs) of up to £5m to help them survive the shutdown.

This is what Mr Sunak said:

“Any good business in financial difficulty who needs access to cash to pay their rent, the salaries of their employees, pay suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms.”

In practice this is simply not happening in the way Mr Sunak hoped. The loans were supposed to be available on “attractive terms” yet we’ve heard some lenders are taking advantage of the dire situation so many of our previously thriving SMEs are being faced b exorbitant interest rates.

There are also long delays in getting the money into the hands of those who need it most.

Furthermore, some businesses that may have recently made a small loss but would remain viable if the help was extended to them, are also being turned away.

If you’re a small or medium size business and you are having problems accessing much needed cash, as a matter of urgency, read on. We’ve compiled a list of actions you can take to improve your chances of obtaining funding.

1. Seek out free advice.

   There are many organisations that offer free financial advice such as the Citizens Advice Bureau and the UK government. There will likely be private firms offering a free consultation, but they can only go so far in such a limited amount of time. Many won’t have the level of financial expertise and business nous that is fundamental to surviving the current coronavirus crisis. And they certainly will not have the intimate knowledge of what makes your business tick, the markets it operates in, supply chain disruptions, staffing issues or issues pertinent to your premises such as rent, business rates and maintenance costs. You need a specialist funding practice for that.
   

2. Find an ethical adviser with empathy.

   Ethical financial advisers will not be looking to profiteer during the COVID-19 pandemic. Many are small businesses themselves, so they understand only too well what it is that your business needs to keep it afloat during the crisis and help you to be in the best shape possible to bounce back when the pandemic passes. The best of the best will be operated by highly qualified advisers who have been through crises before and survived. So they will be empathetic to your situation and they will be highly motivated to help. The relationship should feel like the one you have with your best and most trusted friend. They have your back and will go above and beyond to help you get through this crisis.

3. Start putting together your financial pack of information.

   Any potential lender will need to see your last set of filed accounts, as well as your up-to-date profit and loss and balance sheet since then. They will want to know your state of play with HMRC, so have VAT and PAYE statements to hand. Also have your last 6 months of bank statements to hand, if not approaching your own bank.
   

4. Lenders will want to know how you have been impacted by COVID-19.

   You need to put together some information around:

   1. Breakdown of why you need the additional funds
   2. What is your revenue going to look like over the next 3-6 months?
   3. What cash injections do you expect? E.g. government schemes, other loans, director loans, etc
   4. Do you have any cost cutting plans in place?
   5. Have you made any assumptions – such as the length of time your business will be affected, the likely slow uptick in sales thereafter – whatever it is, you need to state your assumptions.

The more informed and prepared you appear to be, the better chance you have of achieving your funding requirement.

5. How do you know how much you need to borrow?

   The simple answer is that you need to produce a profit/loss and cashflow statement – this will then allow you to show any lender what measures you have put in place and what your borrowing requirements are, rather than stick a finger in the air and estimate a random amount. This helps to validate your borrowing requirement when it is presented to lenders.
   

6. Will I be able to source the funding I desperately need?

   There is no simple answer to this as every circumstance is different. But by providing the above information, you greatly enhance your chances of being able to obtain the funding your business needs.

At Pegasus Funding, we will go into every last detail of your business, analysing where it is doing well and where it is struggling and why. We will then go out to our pool of more than 600 lenders and we will work hard to secure the funding you need. You will have access to our seasoned consultants, with experience across a wide range of industries.

Pegasus is about doing business for real businesspeople. We understand the financial challenges faced by entrepreneurs and we’re proud of our solutions focused service. We’ll demystify the whole investment process with our end to end, holistic and comprehensive service.

Please call the team today for a free consultation on 0203 327 0567 or email [email protected]

We will call you back immediately.