Patron Begbies Traynor offer free advice to businesses on the financial impact of COVID-19

 Talk to your business support network

– Your business insurance might provide the cover you need if your business has to stop trading indefinitely. Check your policy wording as you might have Business Interruption cover in your commercial insurance policy – speak to your insurer if you’re not sure.

Once you have confirmed that you have Business Interruption cover, you will need to check whether you have an extension for “notifiable diseases”.

– Talk to your bank about possible emergency finance options. The British Business Bank is in the process of setting up the Coronavirus Business Interruption Lending Scheme which will provide your lender with a government-backed 80% guarantee against the outstanding facility balance – so the finance should be attainable for all businesses.

– Ask your customers – particularly larger companies – to pay your outstanding invoices. Morrisons supermarket have led the way with this by paying 3,000 suppliers instantly, regardless of payment period. Small businesses or the self-employed with invoices issued should use this moment to chase for instant payment.

– Talk to the Government through their business support helplines, of which some are dedicated to coronavirus. They are designed to help small businesses with advice on how to minimise/cope with the impacts of coronavirus.

– Ask your landlord for some breathing space if you’re experiencing a drop in trade which is impacting on your ability to pay the rent. Landlords might take a generous approaching in these extenuating circumstances by providing rent breaks and/or payment discounts.

– There are also formal procedures available to companies in the form of a Company Voluntary Arrangement (CVA) which shield businesses from creditor pressure and allow them to settle unpaid debts over time. A CVA is a type of restructuring procedure and can sometimes lead to Administration which protects a company and its creditors from further losses and aims to resurrect the business and ensure continuation of trade and employment.

– Emergency funding can help businesses navigate through troubled waters. There are many different funding options available and we can provide free advice in this regard – some which will require a form of security and others simply provided as an old-fashioned capital loan. Bridging loans will be highly-sought after in the coming months. Overdrafts can often be extended.

Invoice factoring is a key solution for businesses looking to recover outstanding invoices – typically at around 80-85% of their value. And there’s the Coronavirus Business Interruption Lending Scheme which has now been extended by the Government so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating during this difficult time. The Government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. The Government will continue to cover the first twelve months of interest and fees.

– Directors should also take extra care not to create individual financial exposure through overdrawn directors’ loan accounts and late payments that can breach personal guarantees. It is common for business owners to take money out of a company with the intention of paying it back later in the year – but these unforeseen circumstances may have thrown a huge spanner in the works which could lead to not only corporate insolvency concerns but also personal insolvency problems, e.g. possible bankruptcy and/or IVAs. We have a designated director liability advice team who can provide free guidance to company directors concerned about their individual position.

– If cash flow really does begin to bite due to COVID-19 and your business is served with non-payment notices such as CCJs, statutory demands, or in the most serious situation – a winding-up petition – you should seek free advice from a licensed insolvency practitioner. These formal notices are often a precursor to liquidation and time is of the essence.

– And finally – if the regrettable situation of insolvency arises and your company has no option but to liquidate, company directors can get a free assessment for possible director redundancy pay of which the average payout is around £9,000.