Don’t commit to borrowing before getting the right advice – by Nick Smith

Well it is all a bit clearer now…I think.

Boris has eased the lockdown across England and many businesses are rapidly putting their plans in place to safely open their doors to welcome customers back on what is being referred to as ‘Independence Day’.

Non-essential shops, hairdressers, pubs, restaurants, hotels, caravan parks and more have all been given a ‘road map’ to reopening.

But like most roads there will be bumps along the way, corners to steer around and hills to climb. You only need to look at Leicester to see how true that is.

Opening the business and having put in the plans to be COVID-19 ready is one thing. Dealing with what has happened over the last 100 days financially, is another.

SMEs are faced with having to unfurlough staff and start paying them; patient suppliers will want their invoices settling; landlords need the rent bringing up to date; and mortgage holidays are coming to an end.

The adage, ‘cash is king’ is fine but, while it has been significantly depleted in businesses over recent months, some may have to take on some debt to ease their way through recovery.

I appreciate borrowing is not for everyone, and some businesses will shy away from it. But when it is the only option available, ensuring the lending product is the right one for the business is key.

There are some excellent business advisers who have access to a range of providers and can ensure the borrower receives the right advice and the most suitable product.

Short term loan, long term play, interest only, capital repayments, early settlements, working capital solutions, secured, unsecured, equity investments – the list goes on.

That’s why tapping into expert knowledge is essential.

Reward works with several excellent introducers across England and Wales who can provide that advice, such as Calvin Dexter, who is extremely well respected for sourcing the right funding solutions for business owners. He makes the following comments about the current situation.

“Getting the right advice about the variety of lending options is of particular importance right now, as the funding landscape is dominated by lenders who are focusing all their attention on delivering Government-backed business interruption loans schemes, such as CBILS & BBLS.

“This fact is reinforced by the number of lenders accredited to deliver CBILS doubling since it was launched. According to new data from HMRC this has resulted in UK businesses borrowing more than £43bn so far through the Government’s coronavirus lending programmes. However, approval rates for CBILS is only around 50%.”

“This leads to the conclusion that the other 50% who have been turned down still want to borrow, however ‘Business-as-Usual’ lending is less plentiful in supply, although it is still out there. Therefore, engaging early with a professional adviser or broker has never been more important to ensure the right funding solution is sourced from the market, be that asset-backed, which has been fairly resilient throughout the pandemic, or unsecured.”

“If, for example, a business needs a quick decision, flexible solutions, a fast turnaround of cash, and has assets which can be used as security – then Reward fits the bill perfectly.”

With Reward’s Business Finance product, companies can borrow between £50k and £3m for up to two years. Instead of capital repayments, companies pay monthly interest. At the end of the term there is the option to pay off the loan or renew it under a new agreement.

With our Invoice Finance Plus, as well as releasing money tied up in unpaid invoices, we can also look at other company assets. So, if a business wants to borrow more we can lend more.

As for the way we work, I will leave the last word to Brian Snape of Mighty Oak Business Finance, who said,

“I just like Reward’s common sense and pragmatic approach towards lending. It will continue to serve you well as we enter ‘the new normal’.”

If you would like to find out more about Reward’s funding solutions or arrange a meeting, please contact us here.