Today companies are facing an unprecedented situation. Many businesses are unable to trade, some have had to alter the way they trade, and most staff have had to relocate and are now working from home. While the government has offered a £330 billion loan package to help businesses through this time, this may not be the answer for a lot of businesses.

The new government-backed Business Interruption Loan packages that have been made available may seem like an attractive proposition, the government will back 80% of the value of the loans, but is it the best course of action?

The loans scheme is very similar to the Enterprise Finance Guarantee (EFG) loan scheme due to the government’s promise to back such a large portion of the loan. However, as is already being reported in the news today, https://www.bbc.co.uk/news/business-52043896, business owners are being asked to sign personal guarantees and offer their primary residential property as security.

This is because the government will only guarantee and underwrite 80% of the loan’s value if the bank has tried every available avenue available to recoup the money from the directors before they approach the treasury for reimbursement. Under the EFG, many directors lost their homes because they mistakenly believed that they were only ever going to be liable for 20% of the loan if things didn’t go well for them. This was not true.

Even if things don’t continue down the same route for companies under the Business Interruption Loans scheme, borrowing to replace missing revenue can be a dangerous move for a lot of businesses, it has to be paid back and with no revenue coming in, some companies could be locked into playing catch-up.

Businesses can raise revenue from completed work that has not yet been paid for. There are hundreds of millions of pounds worth of unpaid invoices, some not yet falling due, some already overdue. If these invoices are paid it could mean that many businesses will make it through these troubled times without having to resort to borrowing. There are companies out there who will struggle for cash and be unable to pay, but there will also be companies who have large reserves of cash to help them through and collecting those invoices could make all the difference.

We understand that this is a very delicate matter in a very delicate time, however, using the right approach and being sensitive to each individual situation can make all the difference to getting paid as well as maintaining the relationships that you have built up over the years.

Now, more than ever, may be the right time to partner with a family-owned and ethical firm who can help you through these difficult times. We are experts at sensitively and ethically collecting invoices for clients, we work with you, as part of your business and have your reputation at the heart of everything we do. It is crucial during times like this that relationships with your clients and customers are maintained, and we do all we can to ensure that these relationships are not damaged.

If you would like to discuss your needs further, please don’t hesitate to contact us below