Lockdown 2.0 – further considerations

Cashflow & Forecasts, Coronavirus, Finance,

How’s your cash situation looking?

Given the recent announcement of Lockdown 2.0 for England, monitoring your cash is, once again, going to be paramount.

We’ve been speaking to lots of clients since the first Lockdown about their cash situation.

  • Some have their Bounce Back loan untouched in a separate account, having applied for one as a ‘worst case’ safety net.
  • Some have invested a proportion of their loan to develop their business and take advantage of opportunities that have presented themselves since they were able to reopen.
  • Others have had to use their Bounce Back loan to survive, and for those businesses, life is still hard.

As England goes into a second lockdown, cash is once again going to be at the forefront of your mind, and it should stay there!

  • What would your cashflow look like with a total lack of income during Lockdown 2.0?
  • What would it look like if business doesn’t really pick up until after Christmas? It’s likely some businesses will postpone any developmental decisions until after the festive period, given that lockdown isn’t due to end until 2nd December.
  • What can you do to extend your cash flow beyond any pinch points?
  • Does the newly extended Furlough scheme make a significant difference?

If you haven’t already got a cash flow forecast that is kept up to date, now is a really good time to pull one together. If it helps, take a look at our Rebound Resources for guidance on how to do this.

Bounce Back Loans / CBILS

Applications for both schemes were supposed to close on the 30th November 2020. This date has now been extended to the 31st January 2021.

The Bounce Back Loan scheme has also been adjusted so businesses who applied for less than the maximum allowed under scheme rules may now be able to apply again to ‘top-up’ their loan. This can be done once only.

The total borrowed will still need to be a maximum of 25% of turnover or a maximum of £50,000.

Finance

We’ve already confirmed that the Financial Conduct Authority (FCA) has extended the cut-off for Mortgage Holidays, which now includes payment holidays on credit cards, car finance, personal loans and pawned goods.

There has been no confirmation as yet around whether people will still have interest in the first £500 of their overdrafts waived. This is due to follow, as the FCA are still working with lenders around this one!

Funding Circle

Funding Circle were already allowing businesses to enter into Short Term Payment Plans (STPP). The premise here, if agreed with them in advance, is as follows:

  • For three months, you do not pay your usual monthly amounts.
  • Instead you make a smaller payment of one third of your monthly repayment via Direct Debit.
  • After three months, you revert to your usual payment schedule.
  • You should do your best to pay off the arrears within the original term of your agreement.
  • Successful completion of the STPP criteria has no negative impact on your credit rating, but you do pay more interest over the term of the loan.

We haven’t had any update from them about any improvement in this offer since Lockdown 2.0 was announced, but if you have an FC loan it may well be worth a call and some thought.

Mental Health Awareness

This week has been a roller coaster ride for business owners.

On Saturday morning, everything was as normal as you could expect from a COVID landscape, and just a few days later we’re back to Lockdown, working out the logistics of Delivery, Click and Collect and working from home.

It seems a good time to remind anyone that may be struggling to keep up that there are lots of different ways to get support with mental health. I covered lots of them in a recent video, and listed all of the contact details too.

You can find that video here.

 

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