In the good old days, prior to Spring 2020, the high street banks were the first and often only point of contact for businesses in need of capital.
Whilst bank lending and general appetite has never returned to the level prior to the financial crisis in 2007/08, in recent years the larger banks and newly emerged second tier lenders have been generally supportive of their clients during phases of growth. However, fast forward to Spring 2021 and we remain in a generally restrictive state with economic volatility and impairment on the horizon, making lenders cautious and perhaps reluctant to expose themselves to much, if any, risk.
Government supported lending has been an advantage of the stimulus plan introduced following the Covid-19 outbreak, and the existing schemes ended on 31 March 2021. With over £20.8b extended under CBILS to 87,500 businesses (as of 24 January 2021), half of which was granted before 31 May 2020, many finance managers and business owners are contemplating what to do next. The replacement government supported loan schemes will assist but much remains unknown as to what this form of lending will look like. Government supported debt isn’t free money, nor is it easy to access despite a BBB approved lending panel which tops 100 different debt providers. Published statistics from HM treasury show that less than 50% of applications have been successful, and as we know, these statistics do not reveal the whole truth. Some businesses have approached lenders and have not submitted an application following their initial feedback, and many have seen their application granted but at levels beneath that requested.
How we can help
At MHA Tait Walker, we have worked with all of the high street banks and a high number of second tier and alternative lenders and have been able to raise capital which our clients have been unable to access otherwise. Through our nationwide reach provided by our brokerage partners we have been able to turn credit declines into acceptances, raise higher levels of capital and also seek capital with reduced security requirements. The process can often be slow and the alternative debt market carries a natural pricing premium but we have seen marked successes from our clients who otherwise had limited options.
The current schemes have changed, and with other changes in the market such as the Crown Preference now back in play it is essential that businesses assess their liquidity needs, both in the short and near term now, as it is likely to be increasingly difficult to raise money in 2021. Facility withdrawals, reductions and requests for additional security are already happening, so for those qualifying for government supported and traditional lending now is the time to act.
