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Bishop Fleming Funding Advisory Service

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COVID -19 – Managing cashflow and approaching your bank

6th April 2021

Coronavirus is having a dramatic impact on the cashflow of many businesses. To support this, the Government has previously announced many initiatives including the Recovery Loan scheme.

This scheme is available until 31 December 2021.

For any business, our advice is to approach their bank early and understand what can be delivered under their normal credit process. If this cannot provide the necessary funding yet their bank wishes to lend, then the Recovery scheme may suit.

Any approach to a funder will need to demonstrate the business was viable before this crisis and will be after. The funding application will need to be well structured and include recent management accounts, a summary narrative plan that explains past performance, current mitigating actions and the assumptions used in the accompanying integrated financial forecasts. A short and long term cashflow forecast remains a crucial tool in the bank decision making process.

Assumptions about the future will be hard but it is important to get across the underlying quality of the business and especially the management team, who need to demonstrate that they are acting in a responsible, professional manner at this time.

There may also be immediate actions that can be taken to ease the pressure on cashflow with your bank including capital repayment holidays and interest roll-up on existing facilities, or maybe there are unused facilities that could be re-allocated to a new loan or increased overdraft. These simple steps are already making huge differences to a number of businesses and can be deployed very quickly by the bank to ease immediate pressures.

Approaching a mainstream lender that you currently don’t have a relationship with could be difficult as they are likely to be struggling to deal with their existing customers. But there are now an extensive number of alternative lenders in the market.

Bishop Fleming can help you to approach these via our partnership with Capitalise in a low cost way.

We all need to remember that these are unprecedented times and everyone will be dealing with their own personal challenges. Your bank manager and other funders are human too with similar challenges to deal with both at work and at home. Yes, they are here to support but by making their life easier and engaging early, it should maximise the chances of a quick and positive response.

In summary, speak to the bank early to at least register that you may need support and are in the process of preparing the information to support the application. The financial projections (including the cashflow) are crucial to the application and it is important to get these right. Bishop Fleming can support with the application process and financial projections as needed and with our wider funding market access can support the application to both the existing bank and other funders.

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