Slowly but surely, small businesses are obtaining much-needed finance from the Government-backed Coronavirus Business Interruption Loan scheme.
Yet, as Sarah Bridge reports, it hasn’t all been plain sailing. Some have accessed funds quickly while others have been left waiting anxiously. A few have thought on their feet and come up trumps as a result…
We’ll drink to that: David, left, and Keith Bott have secured a £1m loan from Barclays for Titanic Brewery
A bank switch meant easy access to a loan
Embarking on an ambitious expansion strategy at the start of this year might, in hindsight, sound like awful timing, but for Staffordshire-based Titanic Brewery it turned out to be a godsend.
The craft brewery, founded in 1985 and owned by Keith Bott – former chairman of the Society of Independent Brewers – and his brother, David, had been seeking additional finance to allow the company to expand its 13-strong pub chain. But their bank was playing hardball and demanding personal guarantees for the extra funding.
‘Having spent 35 years with similar guarantees hanging over us, we were keen not to have them again,’ says Keith, with more than a dose of understatement.
The brothers instead switched their business banking to Barclays where no such guarantees were demanded. But just weeks after securing an additional borrowing facility, the lockdown was announced. With all their pubs shut and brewing stopping altogether, the financial situation looked dire for Titanic.
Their only survival option was to seek an emergency loan, known as a Coronavirus Business Interruption Loan (CBIL).
As Barclays already had all the up- to-date business figures on Titanic, Keith says it was able to ‘come back to us almost overnight’ to arrange the loan. Now Titanic has £1million sitting in its bank account, enough to keep the business going for a year.
‘Barclays has been absolutely fantastic,’ says Keith. ‘Having the money there is a real weight off our minds. I really can’t praise them enough.’
Almost all of Titanic’s 250 employees have now been furloughed – with the company topping up the Government’s contribution so they get 100 per cent of their salaries.
But online and brewery shop sales have doubled. After four weeks lying idle, last Monday the company started brewing beer again. ‘It was lovely walking into the brewery to the smell of brewing,’ says Keith.
Businesses that have had to fight all the way
Keith Bott knows Titanic is one of a minority of businesses that have so far secured a financial lifeline from the Coronavirus Business Interruption Loan scheme.
Thousands of British businesses which have seen their income annihilated by the lockdown are fast running out of money and many are reporting long delays to access the scheme.
Thankfully, the speed of lending by banks to small and medium-sized businesses has increased from a painfully slow start – with the latest figures showing total lending doubling in the week to April 21 to a total of £2.8billion.
But thousands of businesses are still in limbo waiting to get loans approved. Former Royal Marine Steve McCulley runs Lios Bikes in Lee-on-the-Solent, Hampshire.
Having taken on new premises in January and a business loan to fit out the new shop, Steve has seen his overheads shoot up. While he can still carry out bike repairs and maintenance under Government guidelines, his core income stream of fitting and selling bikes has vanished, thanks to social distancing rules.
Last month, he applied for a Coronavirus Business Interruption Loan with his bank NatWest. After initially not hearing anything for several weeks, he has now gone through a lengthy loan application and has been told that he will get something – although he has no idea if it will be the £50,000 he asked for.
‘It was not knowing what was happening that was frustrating,’ says Steve. ‘I’m now just keeping my fingers crossed.’
How a change of plan bears fruit for David
While an emergency loan under the Government scheme is essential for some businesses in order to make it through lockdown, other entrepreneurs have opted to restructure – or even start entirely new businesses.
A few years ago, David Marr set up a business selling glassware and bottles for essential oils. But as supplies came from China, he knew his business would be severely impacted as China attempted to control the coronavirus outbreak.
In the week before total lockdown, David popped into his local Sainsbury’s in Vauxhall, South London, and was astonished to see all the empty shelves.
Switch: David Marr, with his partner Ashley, set up the firm Clapham Fres
‘I thought something’s going on here,’ says David. Just next to the supermarket is New Covent Garden, one of the biggest fruit and vegetable markets in Europe. So early the next morning, David bought as much produce as he could fit in his car with the idea of selling it to friends and family who would also be confronted with empty supermarket shelves.
‘I put up a new website in a matter of days and got £200 of orders straightaway,’ says David. ‘The next day, orders had jumped to £900, all by just mentioning it on Facebook and local online groups.’
Clapham Fresh, his new company, now takes between £5,000 and £8,000 in daily sales – far more than his previous company – and he has a fleet of four vans delivering around London. ‘It’s been a real rollercoaster ride,’ says David, ‘but it’s great to see how thankful people are for our service.’
Emma Jones, founder of small business support network Enterprise Nation, says: ‘Businesses have had to adapt to the new world we find ourselves in. While the majority are still waiting for financial packages to be resolved, it’s good to see that so many are thinking beyond what’s happening today and pivoting their business model.’
Rowena Howie was in a similarly precarious position. After her central London boutique clothes shop Revival Retro closed in response to the lockdown, she spent more than four hours trying to get through to her bank on the phone seeking a Coronavirus Business Interruption Loan.
She then had to chase her application online and via email for weeks. ‘It was a nightmare,’ she says. ‘Your livelihood is being affected but so is your mental health. You can’t think about anything else but at the same time you’re totally stuck.’
After several weeks of getting nowhere, Rowena started raising money to meet her bills via Crowdfunder under the banner Save Revival Retro. So far, she has raised £18,000 from loyal customers that will help meet her payroll costs and other financial commitments.
When her bank finally got in contact to discuss a loan, she believes that the hundreds of donations and complimentary messages helped tip the balance in her favour. She has now been told that her application for an £80,000 loan has been successful.
‘I knew it was going to take a long time, but a month without any information was way too long,’ she says.
Dan Yates initially thought his company Pitchup.com – a booking website for thousands of camping and caravan holidays – would escape the worst of the economic fallout from coronavirus.
‘Our sites are in remote locations, many in the UK, and you can stay on them while observing social distancing,’ he says. However, with the lockdown of the entire leisure sector, his income has plunged 98 per cent, meaning he has had to trim costs and furlough staff while keeping the business going.
‘We can’t just hibernate,’ he says. ‘It’s critically important to be able to be ready if and when things open up again. Our high season is between May and August so if we are able to be up and running at any point, then we have to be able to take advantage.’
While Dan has benefited from a 50 per cent rent reduction from his landlord Workspace and reduced prices from some of his IT providers, Pitchup doesn’t qualify for any small business grants.
Dan is now about to apply to his bank for a Coronavirus Business Interruption Loan, having reduced costs as much as possible and gathered together all the necessary paperwork.
‘It’s been really unnerving,’ he says. ‘The only good news is that bookings for next year are 30 times higher than they would usually be.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.