Businesses need Longer-term Support to Survive Release of Lockdown

David Martin of Knill James based in Lewes is calling on the Chancellor to consider a further overhaul of the CBILS scheme, or to supplement this with other grants to support the working capital needs of the country's SMEs as he announces that the furlough scheme is to be gradually withdrawn.

He explains: “As part of our membership of The Corporate Finance Network across the UK, we had been asked to contribute to an exercise with eighteen other firms, where we identified how many of our clients had prepared cashflow projections.  The research, representing over 19,000 owner managed business clients who employ on average 20-80 staff each, shows that only 10% have prepared detailed cashflow projections, and they are likely to suffer a great shock when they return to work, as almost 70% have reported a reduction in trade as a result of Covid-19.

“Companies will not simply be able to pick up business where they left off. They have debts from deferred taxes, rents and overheads and they will now incur more expense as they are required to make their workplaces Covid-19 secure. In addition, trade will not return to 100% of pre-Covid levels immediately as social distancing will still require all sectors to take things slowly. This will ripple down the supply chain and as many SMEs have already extended their credit with suppliers past their agreed terms, they will struggle to order more materials and meet any demand from customers which they may have.  I would urge all business owners to prepare line by line cashflow projections and to engage with efficient credit control procedures in earnest.”

David Martin concluded “CBILS is still not working for most SMEs and facilities are not being approved quickly enough. Our clients on the whole do not meet the criteria for the small business rates and retail grants and therefore I would urge the Chancellor to consider rolling out further grants for working capital support, or consider how else the British Business Bank can urge banks to lend more under the CBILS scheme.”