May 29, 2020

Plan for the Worst: How to Make Sure You Can Access Capital During COVID-19


We’ve spent the last few months speaking to brokers and companies about a huge range of business challenges. The depth of problems is more profound than any of us have experienced, but UK businesspeople are pretty resilient and continually looking for solutions.

We’ve had many productive conversations with companies about current and future funding needs, and one point has stood out: experienced entrepreneurs are planning ahead, but many are leaving it too late.

The tranche of government support has created an artificial feeling of security, but furlough is already being wound down, and the message from government is to get back to work. Companies that believe we’re going to get back to normal any time soon are being overly optimistic. Our message is clear: expect the worst and plan ahead.

Expect the following:

Capital may dry up: Government-backed loans are keeping cash flowing from the banks, but when the government steps away, expect lenders to be cautious. This includes traditional lenders but also finance providers you may have previously relied on, for asset or invoice finance.

Demand may recover, but very slowly: We’ve read many reports that suppressed demand will result in a ‘V-shaped’ economic recovery. While we hope this is true that’s an optimistic view of the economy. More realistic analysis suggests we may not be back to pre-pandemic economic activity for a few years. 

Your customers may be unable to pay invoices: As government support is stopped, many companies are likely to struggle, and we expect insolvencies to increase. In an interview with Sky News, our colleague, Mark Halstead predicted that bad debt would more than triple next year as the recession bites.

Supply chain problems could persist: Global supply chains have been relatively resilient with the food industry, in particular, performing well to keep shelves stocked. But many companies still report problems getting the products and raw materials they need.

We may not have seen the last of COVID-19: No-one knows whether we’ll see a second spike of COVID -19, but evidence from other countries suggests it’s a definite possibility. This will likely cause more disruption and until we’ve found a way to live with the disease (or manage it medically with therapies or a vaccine) further economic damage seems probable.

While I hope we’re wrong about these bearish predictions, we’re advising companies to assume the worst and plan accordingly. The companies having early discussions with us will have the most options. If we can understand the business as early as possible, we can suggest actions now that will pay off in three to 12 months.

So if you think you’ll need lending speak to us now!

Here are five actions we’re advising every business to take:

  1. Understand your funding needs and option: Look at what cash you may need over the next two years and speak to lenders to find out if you’re still eligible for current funding lines – don’t assume your regular funding will still be available.
  2. Take the time to scenario plan: Now is the time for optimism in your day-to-day actions but pessimism in your financial projections. Assume the worst and have a clear plan of what you’ll do if the worst happens.
  3. Make a bad debt provision: Your clients are probably facing similar struggles, so don’t assume your outstanding invoices will be paid on time – or ever. Keep an eye on the financial health of your largest clients and put a significant bad debt provision in your projections.
  4. Plan to repay government loans: We’ve spoken to some businesses that think loan repayment for government-backed schemes won’t be enforced. While we don’t know the level of enforcement, expect to pay it back.
  5. Pivot your business model: We’ve spoken to many forward-thinking businesses that have re-directed their resources to other income streams, for example, we’ve seen manufacturers making different projects and marketing agencies offering COVID-19 communications. Think about other services you can offer.

Good luck and we’re only a phone call away if you need to discuss lending requirements. To discuss a commercial loan between £25,000 and £1m, email the team on or call on 0161 451 5710.