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June 3, 2020

SMEs look towards recovery as lockdown lifts

With restrictions on some non-essential businesses lifting, and further changes due to come into effect on 15th June, new research from Intuit QuickBooks suggests SMEs are looking towards recovery following the impact of the pandemic. Almost three in five (57%) small and medium-sized enterprises (SMEs) feel confident about business activity in the next month – a significant uplift from the 46% recorded in April’s Small Business Sentiment Tracker.

Meanwhile the proportion of SMEs that have completely stopped operating has fallen from 20% in April to 13% as businesses find new ways to reach customers and lockdown starts to lift.

One in five (19%) SMEs expect overall customer activity to return to normal levels within the next month, while 14% say the same of incoming payments and cash revenue.

However, the outlook varies significantly depending on sector. SMEs in the construction, manufacturing and wholesale sectors are showing greatest signs of recovery, however, those in the hospitality and leisure industry are continuing to suffer, with more than half (51%) having stopped operating completely (see appendix, table 1).

Britain’s small businesses still need support

As Britain’s small businesses start to reopen, getting the right support remains just as crucial as when lockdown began. More than three in five (62%) SMEs require some form of additional support, with clear government guidance on how to reopen safely and minimise risk being the most common requirement (23%).

Other forms of support being drawn on by SMEs include an extension of the Self-Employment Income Support Scheme (19%) and discounts or a freeze on payments for business operations.

Nearly two in five (39%) SMEs have now applied for government support schemes, compared to 22% in April.

Chris Evans, vice president and UK country manager at Intuit QuickBooks said:

“Small businesses have been disproportionately impacted by Covid-19, with many having to close or cut back on activity. The likes of cash flow, late payments, confidence and the burden of admin have all taken their toll, but we are now finally starting to see some light at the end of the tunnel. Many SMEs will be starting to turn their attention to recovery and readiness to reopen their doors.

“How small businesses plan to reopen will be pivotal in terms of their long-term survival. We know support is needed now more than ever, and we’re committed to helping SMEs find their feet again. Digital tools can make the day-to-day running of a business more efficient and can play a key role in helping small business owners understand their recovery trajectory. Crucially, these tools also give owners more time to concentrate on what really matters: getting back to business.”

June 3, 2020

New lenders accredited to British Business Bank CBILS

Today the British Business Bank has announced that it has approved a new lender for accreditation to the Bounce Back Loan Scheme (BBLS) and three new lenders for accreditation under the Coronavirus Business Interruption Loan Scheme (CBILS).

JCB Finance will join the other 18 BBLS lenders who have been accredited since the scheme opened last month.

New CBILS lenders Arbuthnot Commercial ABL, Shire Leasing, and Silicon Valley Bank will also be able to provide financial support to smaller businesses across the UK that are losing revenue and seeing their cashflow disrupted, as a result of the Covid-19 outbreak.

Following their approval, each lender will be putting in place the operations required to start lending under the scheme and will confirm shortly the dates from which they will be ready to start receiving applications from smaller businesses across the UK.

Keith Morgan, CEO, British Business Bank, said: “Our accredited lenders have seen an incredible demand for Covid-19 business loan schemes since they became available. Accrediting these additional finance providers means further support for smaller business customers and continues the British Business Bank’s long-term objective to offer more diverse sources of finance to smaller businesses.”

Government published statistics show more than 745,000 businesses have to date benefitted from over £31 billion in loans and guarantees to support their cashflow during the crisis through schemes delivered by the British Business Bank. This includes 45,843 facilities worth £8.9bn through the Coronavirus Business Interruption Loan Scheme, and 699,354 facilities worth £21.2bn through the Bounce Back Loan Scheme.

The accelerated accreditation process the British Business Bank has put in place for coronavirus schemes means it has been able to increase the number of lenders on the CBILS scheme by 98% since the scheme’s launch, increasing the number from 41 to more than 80.

The Bank continues to review applications from a wide range of lender types – from PRA-regulated banks, to platform lenders, debt funds, invoice finance lenders, asset finance lenders and responsible finance lenders.

June 3, 2020

Zephyr Homeloans launches new suite of buy-to-let mortgage products

Zephyr Homeloans, the specialist buy-to-let (BTL) lender, has launched its new suite of buy-to-let mortgage products offering up to 75% loan-to-value (LTV).

Zephyr has expanded its range of fixed-rate BTL mortgages for standard properties, residential properties, houses in multiple occupancy (HMOs), multi-unit blocks (MUBs), new-build properties and flats above commercial properties, all priced at different rates to reflect different LTVs.

A selection of two-year, five-year and seven-year fixed rates are available in each range.

Rates start at 3.19% for a two-year, fixed-rate, standard property buy-to-let mortgage and at 3.69% for a standard, five-year, fixed-rate loan.

LTVs are available at 60% and 70% across all ranges, and up to 75% on the standard range.

Zephyr will lend up to £1m on its standard range at 70% LTV and up to £750,000 on its other ranges.

Paul Fryers, managing director at Zephyr Homeloans, said: “We’re excited to offer such a wide-ranging suite of products to our clients as the BTL market begins to open up and the market starts moving.

“Our product expansion offers options suited for a range of needs – whether landlords are aiming to continue to invest in new BTL properties or seeking to restructure their existing portfolio.”

June 3, 2020

Cynergy Bank now offering CBILS

Cynergy Bank is pleased to announce that from today it will offer the Coronavirus Business Interruption Loan Scheme (CBILS) to new business customers, having launched the scheme for existing customers in late April 2020.

Following the British Business Bank’s announcement in April 2020 that Cynergy Bank – along with three other ‘challenger’ banks – had become part of the government’s emergency coronavirus lending, the bank has already received applications from existing customers which they are in the process of supporting and will result in over £30m in CBILS lending.

The bank will now provide extra financial support for medium sized businesses across the UK, who are not currently its customers. Cynergy Bank will typically provide loans from £1m to £5m to new customers.

This scheme is designed to support UK based small and medium-sized businesses, with a turnover of up to £45m, who have a viable business proposition but are facing challenges as a result of the Covid-19 outbreak. As the bank that focusses on business owners, entrepreneurs and family businesses, Cynergy Bank has specific expertise and knowledge to provide banking solutions required whatever the economic circumstances.

Commenting on the launch of CBILS, Nick Fahy, CEO of Cynergy Bank said:

“I am delighted we are now able to offer the Coronavirus Business Interruption Loan Scheme to both new and existing customers. As long-time advocates of business owners, property entrepreneurs and family businesses, we want to be able to support them through the good times and the bad. Understandably, the UK and global business community is facing a challenge like none we have seen in our lifetime and we are eager to do our bit in supporting our business customers – this scheme will allow us to do just that.

“We stand ready to support customers across the UK and we expect the loans we advance to be in the range of one million to five million pounds.

We put relationships at the heart of all that we do and with our participation in this loan scheme we can be there for those that need extra support during these challenging times.”

June 3, 2020

New appointments to UK Finance board

UK Finance has today announced the appointments of Anne Boden, CEO at Starling Bank Limited, Ruth Leas, CEO at Investec Bank plc, Beatriz Martin Jimenez, Global IB COO & UK Chief Executive at UBS, Steve Hughes, CEO at Coventry Building Society, Anne Marie Verstraeten, UK Country Head BNP Paribas to its board.

In line with the expiration of their terms agreed with UK Finance board the following will be stepping down from 1 July 2020:

  • Paul Gallagher, ABN AMRO
  • Paul Lynam, Secure Trust
  • Peter Smith, Blockchain
  • Ian Stuart, HSBC

In addition, Jeni Mundy, MD UK & Ireland, Visa joined the board, replacing Charlotte Hogg, Visa, as of 22 May 2020.

Representing more than 250 firms, UK Finance is the collective voice for the banking and finance industry acting to enhance competitiveness, support customers and facilitate innovation. It offers research, policy expertise and advocacy as well as operational and project implementation to enhance members’ own services where collective activity across the industry is appropriate. The board, which is led by UK Finance Chair Bob Wigley, has been developed to ensure senior and fair representation across the industry – as of 1 July 2020, it will achieve a 50:50 gender representation split.

Commenting on the changes to the UK Finance board, Bob Wigley, Chair of UK Finance, said:

“More so than ever, it’s vital that the banking, finance and payments industry is able to support its customers, providing them with the finance they need during these difficult times. The UK Finance board has an important role to play in enabling us to support our members and their customers, comprising senior leaders who bring together diverse and wide-ranging expertise from across our member firms. And that diversity is absolutely key in every sense, helping us to understand the needs of the customers our members serve which is why I am delighted that on our three year anniversary, we have achieved equal gender representation on our board.

“The board would also like to express its gratitude to Paul Gallagher, Paul Lynam, Peter Smith, Ian Stuart, and Charlotte Hogg who have all made a significant contribution in the development and success of UK Finance over the last three years.”

Ann Cairns, chair of the 30% Club and vice chair of Mastercard said:

“I am delighted to see the new appointees to the UK Finance board. It is testament to a forward-looking board that they have reached gender balance in a few short years. All of the evidence shows that diverse boards achieve the best results and this latest development demonstrates UK Finance as an industry role model for its members.”

June 3, 2020

Lenders back 750,000 businesses with more than £31bn

Figures published by the Treasury  reveal how the banking and finance sector is helping businesses across the UK through these tough times.

So far, lenders have approved over £31.3bn to over 745,000 businesses through government-backed schemes. In the past week alone, more than £3.8bn in lending has been provided to 94,000 firms through these schemes. More applications have been received and are expected to be approved in the coming days.

This represents an unparalleled level of support from the industry. Since the launch of the first coronavirus support scheme in late March, over 745,000 facilities have been approved by lenders through the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS) in a little over two months. In comparison, an average of 275,000 loans and overdrafts were provided in total each year by the ten largest banking groups to UK SMEs over the past five years .

As of 31 May, lenders have provided £21.3bn through the Bounce Back Loan Scheme (BBLS), an increase of £2.8bn over the past week. Over 91,000 applications were approved in the past week.

Lenders have approved £8.9bn in support through the Coronavirus Business Interruption Loan Scheme (CBILS) to almost 46,000 businesses. This is an increase of over £750m since data was last published.

More support has also been made available for larger and medium sized businesses in the UK through the Coronavirus Large Business Interruption Loan Scheme (CLBILS). The number of businesses that have received financial support increased by 191, totalling just over £1.1bn.

These government-backed schemes are just part of the banking and finance sector’s plan to help businesses in the UK through the coronavirus crisis. This extensive support includes working capital extensions, overdraft extensions, capital repayment holidays and asset-based finance, allowing businesses to access the support that is most appropriate to their needs.

Stephen Jones, Chief Executive of UK Finance, said:

“These figures show that the banking and finance sector is committed to playing its part in helping businesses across the UK through these tough times.

“The amount of support available to firms affected by the Covid-19 crisis is unparalleled. Over £31bn has been approved in government-backed lending schemes so far to almost 750,000 businesses, with a further £19 billion drawn under bank-arranged commercial paper facilities.

“But government-backed loans are not the only support the banking and finance sector has made available. Over the last few months, lenders have put in place a clear plan to support businesses in every region of the country, including through offering extended overdrafts, capital repayment holidays and asset-based finance to businesses that need support.

“It’s important to remember that any lending provided under government-backed schemes is a debt not a grant, and so firms should carefully consider their ability to repay before applying.”

 

 

June 3, 2020

Shop prices fall fastest since 2006

  • Shop prices fell by 2.4% in May compared to a 1.7% decrease in April. This is below the 12- and 6-month average price decreases of 0.7% and 1.0%, respectively. This is the highest rate of decline since our series began in December 2006.
  • Non-food prices fell sharply by 4.6% in May compared to a decline of 3.7% in April. This is below the 12-and 6-month average price declines of 1.9% and 2.4%, respectively. This is the highest rate of decline since our series began in December 2006.
  • Food inflation eased to 1.5% in May, down from 1.8% in April. This is in line with the 12- and 6-month average price increases of 1.5% and 1.5%, respectively.
  • Fresh food inflation slowed to 0.5% in May, down from 1.0% in April. This is below the 12- and 6-month average price increases of 0.8% and 0.6%, respectively.
  • Ambient food inflation decelerated slightly to 2.9% in May down from 3.0 in April. This is above the 12- and 6-month average price increases of 2.5% and 2.6%, respectively.

Helen Dickinson OBE, chief executive, British Retail Consortium:

“Shop prices in May fell at their fastest rate since 2006, which was largely driven by the drop in non-food prices. Clothing and Furniture saw the biggest drop as retailers ran promotions to encourage consumer spending and attempted to mitigate recent losses. Year-on-year food prices increased slightly due to higher business costs, implementing social distancing measures and the upward pressure from labour shortages, but were down on the previous month as more home-grown produce became available. We expect to see continued upward pressure on food prices from the effects of the pandemic in the coming months, while non-food prices are likely to remain deflationary with subdued sales.

“Even as non-essential shops begin to reopen from 15 June, consumer demand is expected to remain weak and many retailers will have to fight to survive, especially with the added costs of social distancing measures. Retailers face an uphill battle to continue to provide their customers with high quality and great value products despite mounting costs. Government support remains essential, both to rebuild consumer confidence and to support the thousands of firms and millions of jobs that rely on it.”

Mike Watkins, head of retailer and Business Insight, Nielsen:

“With the retail industry coping with store closures and social distancing limitations, it’s no surprise to see shop price inflation slowing in recent weeks. Across the major supermarkets with sales growths in high single digits in May, the consumer spend on promotions has also been at an all-time low, but there has been little upwards pressure on prices. However, as we move towards summer with the importance of seasonal foods and with the supply chain still disrupted, we can anticipate some volatility in prices.”

June 3, 2020

Corporate Insolvency and Governance Bill: Welcome, but will it promote turnarounds?

The government recently published its draft Corporate Insolvency and Governance Bill which makes several significant changes to the UK’s corporate and insolvency framework. Its aim is to help companies maximise their chances of survival, protect jobs and support the UK’s economic recovery.

Some of the measures have been anticipated for several years, whereas others have been introduced specifically to help support businesses through the economic impact of Covid-19 and give them “breathing space” to keep them trading while they explore their rescue options.

Once enacted, which is likely to be very soon, the Act incorporates both temporary and permanent measures that offer real prospects for reforming the future of saving businesses, providing they are used for their intended purposes.

Here is a summary of the measures and how they might impact on turnaround and rescue culture:

Changes to the UK insolvency regime

Permanent

  • A moratorium that allows insolvent companies (or those likely to become insolvent) to obtain an initial 20 business days of ‘breathing space’ with scope for extension to pursue a restructuring plan without creditors being able to take legal action, seize assets or enforce debts.
  • The introduction of a restructuring plan that operates like a scheme of arrangement to deal with creditors by class as a category of creditor to cram down debt and/or impose the plan on dissenting creditors providing 75% of the class approve the plan.
  • A change to supplier termination “ipso facto” clauses in supply contracts to ensure continuity of supplies and services during the insolvency and restructuring process.

Temporary

  • The suspension of wrongful trading to allow businesses to keep trading without the threat of personal liability for directors. All other directors’ duties remain in force.
  • The suspension of creditors’ ability to issue statutory demands and winding-up petitions when a company hasn’t been able to pay its bills due to Covid-19.

Changes to the corporate governance regime

Temporary

  • The relaxation of filing requirements and deadlines to account for Covid-19 restrictions.
  • The relaxation of regulatory requirements so companies can delay AGMs until late September or hold closed AGMs online.

To read the full article click here

June 3, 2020

Tink extends Open Banking support for PayPal

Tink and PayPal’s extended commercial agreement now includes all countries within the European Economic Area (EEA). As a first step, PayPal will implement Tink’s open banking and account aggregation technology into some user experiences for customers. The expanded relationship is supported by a second strategic investment from PayPal, carried out in connection to Tink’s latest €90m investment round that was announced in January 2020. PayPal’s first strategic investment in Tink was made in June 2019.

Daniel Kjellén, co-founder and CEO of Tink, said: “PayPal is one of the world’s leading fintech companies, serving more than 330 million consumers and merchants in more than 200 markets worldwide. So we are honoured to have been selected to help this global leader, and delighted to have the opportunity to extend our relationship with them following this new agreement and strategic investment. As Europe’s leading open banking platform, we are looking forward to continuing to support PayPal as they extend and enhance their services across the whole of Europe.”

June 3, 2020

Harpers Environmental cleans up with £2m in funding from IGF

Industrial services and waste management firm, Harpers Environmental, has secured £2m of funding from Independent Growth Finance (IGF). This invoice discounting facility is central to the company’s refinance for growth.

The company focuses on the extraction, treatment and appropriate disposal of waste, based out of two sites in York and Teesside. It serves clients across a range of critical sectors including food processing, manufacturing, petrochemicals and utilities. Clients include Yorkshire Water, Karro Foods, Sabic/lndaver and Biffa.

Finance in a fluid environment

Harpers Environmental is supporting essential services and infrastructure during the current crisis. The work undertaken by the company is a key part of ensuring that food supply chains are maintained, water treatment processes continue without Interruption, and that waste continues to be handled and disposed of in an environmentally compliant way.

The Covid-19 backdrop has inevitably resulted in a more fluid trading environment and in some rebalancing of activity across regions and industry sectors, which the company has rapidly reacted to, ensuring that labour, vehicles and machinery are in the right place at the right time to meet client requirements.

A partnership built on a genuine relationship

For the family-owned business, finding the right partner was essential. The invoice discounting facility provided by IGF is flexible enough to allow the business the headroom needed for the next stage of its growth.

Jonathan Marlow, executive director of Harpers Environmental, explains “In IGF we saw a similarly entrepreneurial, pragmatic and agile partner which fits perfectly with the direction of our business. The whole team at IGF has been superb and has moved at pace to complete the transaction, notwithstanding the challenges of the Covid-19 backdrop, and this will support our growth over the next five years.”

Confidence of delivery

Jeff Greenfield, ABL director at IGF, added “We are delighted to support the team at Harpers Environmental as they continue on their growth path. We took the time to understand the business so that there was no variance from indication of terms to the final offer. Despite the logistics challenged presented by Covid-19 we were pleased to complete this deal ahead of schedule.”

IGF commit to a speedy turnaround for an indicative offer to businesses, with the entire credit committee reviewing and committing to the indicative offer. This provides businesses with confidence of delivery, in spite of the current climate.

Jonathan Marlow, executive director of Harpers Environmental, explains, “From the initial conversation six weeks ago, to signing, IGF has been consistent and unwavering in its delivery of the transaction. Clearly any credit decision is that bit more challenging in the current environment and so deliverability is paramount from the company’s perspective.”

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