Updated 20 March 2020, 18:00 hours
XPOS is about helping our retail customers grow a successful business and nothing's changed on that front. We are 100% committed to working with you throughout the Coronavirus outbreak: Firstly, to provide the tools and advice to help you continue to run the shop business over the next few months; and also to ensure your business can take-off ‘with aplomb’ as soon as the current restrictions are lifted!
Following government announcements this week, we now know there are a number of actions you can undertake to help your business during this difficult period. Now, more than ever, it is essential to focus on what you can do, rather than what you can’t. And before making drastic decisions, it’s crucial to know the options available to you, and your business.
Below we outline the information you’ll need in order to apply for a Coronavirus Business Interruption Loan; how to go about it; who to speak to; and how you can use your XPOS system to help.
The Government has now offered 3 key ways to help small to medium businesses during the impact of the Coronavirus. These are:
- Loans: Also described as a Coronavirus Business Interruption Loan. These are just like your standard loan and will need to be paid back.
- Grants: ‘Actual’ money. These will not need to be paid back.
- Exemptions: These are bills you will not now need to pay.
Today we will be looking at the first of these options: LOANS
What is a Coronavirus Business Interruption Loan?
These “Government backed” loans will enable businesses to apply for a loan of up to £5 million, with the government covering up to 80% of any losses, with no fees.
How do they work?
The first 12 months of these loans will be interest-free for businesses with the Government covering the first 12 months of interest payments. Businesses will still be responsible for repaying the capital loan amount. Please bear in mind that the loans will be delivered through British banks.
Can anyone get a loan?
A business will need to demonstrate that the business would be perfectly viable were it not for the impact of Coronavirus measures. So, if the business was struggling beforehand, you are more likely to be ineligible.
Is a loan the right choice for me?
It’s important to remember that these “Government backed” loans are just like any other loan you’d get from your bank. You will need to pay this back, and there will be some interest. If you believe that you can’t pay wages, stock or any other bills for the next 2-3 months, then these loans are designed to save your business from going under. As always, it’s worth discussing anything like this with your Accountant before you finalise the application. Just remember you’ll need to make any decisions promptly.
<<26/3/2020 NEWSFLASH! Coronavirus Business Interruption Scheme Update!>>
1. For those retailers thinking of taking a loan under the new scheme, we are just learning more about this and want to make our customers aware of some things:
2. Rates are higher than we had hoped. We are being told 3.5% over base rate for loans between one and 3 years, and 4% over base rate for loans between 3 and 6 years. Let’s hope there is pressure on the banks to reduce these.
Business owners should also be aware that some banks are currently asking you to take personal guarantees on the whole loan amount. Again, there is pressure on the banks to stop this. If you take up one of these loans, we’d suggest you argue the case that only 20% is guaranteed by the business owner, as the rest (80%) should be covered by the government.
3 STEPS TO SECURE YOUR BUSINESS INTERRUPTION LOAN
- Firstly, get in touch with your bank to find out who to speak to about securing a Coronavirus Business Interruption Loan. They should tell you what the process is and the information you need to present in order to secure the loan. Make an appointment to see (or access online) the right person in the bank. Do it now, ahead of the crowds!
- Secondly, ask your accountant to help you prepare a business plan and application for the loan.
Although there are no clear governmental guidelines on this yet, we suggest you’ll need a summary of 2- or 3-years’ financial information (company accounts) - actual time period will vary by bank or business. Your accountant can help you with this.
To apply for the loan, you’ll need to prove you have a viable business – this is why the historical data is important. If you have only just started your business, you’ll need to concentrate on the forward plans (see below).
XPOS can really help you here.
Two Essential XPOS Reports You’ll Need
- Firstly, you want to get and understanding of your sales by month over the last 2- 3 years. To do this go to All Reports > Sales Analysis > and run the Monthly Sales Analysis by DPS. Fill in the date range to cover the past 3 years (or as long as you have been running the system, if you haven’t had it for 3 years). You’ll probably need to run the report for just the Golf Shop Department to start with. This report will show you what you’ve been turning over by month in the shop over the selected period.
- Having done that, the next useful report would be the Sales Analysis By DPS. Run this for your sub groups and for each of the last 3 years. You can access this in All reports > Sales Analysis > and run the Sales Analysis By DPS. Fill in the date range to cover the years required. Select the Sub group option for the breakdown.
- Your bank will also want to see evidence that you would have continued to be a viable business without the Coronavirus outbreak. To help you do this, put together a plan for the coming financial year, including what you had expected to do in terms of sales and costs.
You’ll then need to plot what you think will happen now that the virus has impacted your sales. We’ve created a new easy to use Budget Tool to help with this. Simply click here to download and you can fill it in right now.
To help you fill in the Budget Planner, run the Monthly Sales Analysis by DPS report in XPOS to view annual totals and % of turnover per month. Simply add the figures for what you had hoped to do for 2020, and what you are predicting to do for 2020 now, and the live calculator will work it all out for you. Note: it will only cover sales through the business – you’ll need to factor in overheads as well. Your Accountant can help with this.
Once you have your original/budgeted, plan and your new plan, you can calculate the difference i.e. the impact from the Coronavirus. You’ll need this information when applying for your loan. Bear in mind that the impact of the outbreak might ripple throughout the next 12 months, or even beyond.
For some business owners, a loan could be the lifeboat they need.
For further information on these loans, go to the British Business Bank site here.As always we are here to help so please get in touch with us via phone, email or the CHAT button on our website.