Matt Robinson, fund manager for the Rosebud Fund, offers his view of the financial marketplace as businesses across region navigate through the challenges of the coronavirus pandemic and try to keep operational and out of debt.
The Rosebud Fund, a debt fund backed by Lancashire County Council, was first established in 1986. During the 34 years of its existence it has survived two notable recessions, that of the early 1990’s and the Great Recession of 2008.
Economic depressions are synonymous with lenders tightening their belts, however, what’s unusual about our current predicament is the surge in loans provided to businesses.
This is, of course, linked to the plethora of government guaranteed loans that are available now. Figures provided by the British Business Bank indicate that, as of late July, 2020, an incomprehensible £49bn has been injected via these schemes in just five months.
My advice to all businesses, particularly those who have borrowed, is to thoroughly understand your cash flow. It’s nothing you won’t have heard before but it’s poignant now more than ever.
Both the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) come with periods of payment holidays and subsidisation of fees and interest. Whilst these terms are greatly appealing now, the loans must be repaid eventually, and the risk is that repayments commence unexpectedly and are not budgeted for. This will only be exacerbated by the withdrawal of other forms of emergency government support later this year.
Looking ahead, what does the lending landscape look like?
I would expect most lenders to pull back when the government backed loan schemes (which have been extended), end on November 30, 2020. Businesses seeking finance after this deadline should expect a more rigorous application process. Be prepared to talk about the impact coronavirus had on your business, the proactive steps you took to manage the situation and, if you received a BBLS or CBILS loan, what it was used for.
Present a business plan and forecasts which contain reasonable assumptions and models including a contingency plan for a second wave. As lenders, I hope that we can take forward some of the technology driven positives, which have resulted in streamlined processes and quicker decisions, to permanently make getting funding simpler.
Matt Robinson is a fund manager for the Rosebud Fund at GC Business Finance.
GC Business Finance has been appointed to deliver the £11.25m Rosebud Fund on behalf of Lancashire County Council. Rosebud provides cashflow loans to growing businesses in Lancashire County Council’s administration area.
Following the impact of Coronavirus, the traditional Rosebud Fund has been renewed to allow for a more flexible approach to finance for businesses of all shapes and sizes across Lancashire. The Rosebud team have worked hard to ensure that businesses have a fast and flexible way to access finance for their business.
Take a look at the Rosebud Rebound Fund Support Page for further details.
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