Originally written by Timothy Adler on Small Business
The Government should convert the projected £35bn of bad debt from small business owners who have taken out Covid loans into tax owing.
Converting the bad debt into tax that could be repaid over years to HMRC would free up cash better spent on investment and saving 3m jobs.
So say over 250 financial experts led by Aviva chairman Sir Adrian Montague in the long-awaited report from TheCityUK.
TheCityUK Recapitalisation Group calls for the Government to back a “UK Recovery Corporation”, which would manage £35bn of unsustainable debt already Government guaranteed.
>See also: Government should triple equity to invest in businesses to £30bn
Over time, private investors could invest in the UK Recovery Corporation, encouraging the public to back SMEs in Britain, something chancellor Rishi Sunak is keen on.
Depending on how much money they owe, small businesses could either go into a “Business Repayment Plan” to convert unmanageable loans into means-test tax liabilities, or, for larger debts, use “Business Recovery Capital” to convert COVID-19 crisis loans into preference shares or long-term subordinated debt.
Both solutions mean small businesses will not have to give up any equity in their businesses.
>See also: Bim Afolami calls for £15bn Recovery Fund for scale-ups
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City grandees call for small business Covid debt to be turned into tax owing
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Government should convert the projected £35bn of bad debt from small business owners who have taken out Covid loans into tax owing.
Converting the bad debt into tax that could be repaid over years to HMRC would free up cash better spent on investment and saving 3m jobs.
So say over 250 financial experts led by Aviva chairman Sir Adrian Montague in the long-awaited report from TheCityUK.
TheCityUK Recapitalisation Group calls for the Government to back a “UK Recovery Corporation”, which would manage £35bn of unsustainable debt already Government guaranteed.
>See also: Government should triple equity to invest in businesses to £30bn
Over time, private investors could invest in the UK Recovery Corporation, encouraging the public to back SMEs in Britain, something chancellor Rishi Sunak is keen on.
Depending on how much money they owe, small businesses could either go into a “Business Repayment Plan” to convert unmanageable loans into means-test tax liabilities, or, for larger debts, use “Business Recovery Capital” to convert COVID-19 crisis loans into preference shares or long-term subordinated debt.
Both solutions mean small businesses will not have to give up any equity in their businesses.
>See also: Bim Afolami calls for £15bn Recovery Fund for scale-ups
Business
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Why Britain’s SMEs need a proper small business bank
by Greg Taylor • • 0 Comments
Originally written by Greg Taylor on Small Business
The UK banking system is currently failing small businesses.
In theory we do have a solution, the British Business Bank (BBB), but it’s not fit for purpose and isn’t even a real bank – just a platform for connecting lenders to SMEs. As we look to reboot the UK economy, the government needs to take radical action to ensure small businesses aren’t denied funding by a banking system which doesn’t work for them.
At present SMEs looking for funding face a perfect storm. Blanket credit policies from the banks, the fact that some SMEs are overleveraged due to the CBILS borrowing they needed to survive the pandemic, issues with liquidity within many alternative peer-to-peer lenders, and the banks’ current lack of lending appetite, have all combined to make present circumstances very tough for SMEs. They need help urgently and the best solution would be to establish a new government-backed bank to rival the main high street and investment banks and to replace the British Business Bank.
>See also: British Business Bank increases small business support by over a quarter in the past year
The British Business Bank doesn’t perform a banking role but simply helps introduce other
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Nearly 1m businesses on brink of collapse, warn accountants
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
UPDATED: More than 800,000 businesses are within weeks of going bust because they can’t get the coronavirus business interruption loan.
Nearly one-fifth of small and medium-sized businesses are unlikely to get the cash they need to survive another month despite promises of unprecedented government support, according to the BBC Today programme.
Many firms have told the BBC that they can’t get the emergency loans or that the money will take weeks to come through.
With bank branches shut, thousands of struggling firms can’t get through by phone or when they do, they are being told they are not eligible.
>See also: How to get the government’s £10,000 cash grant for small businesses
Banks told the BBC they are following government rules on SME lending that firms only qualify the emergency loans if they cannot borrow in a normal commercial way or by taking out a loan against property.
Small business owners have contacted Small Business, saying they are being pushed towards standard commercial loans when they have rung up about the CBIL and that without a CBIL many businesses face collapse.
While grants are promised for the hardest-hit sectors such as retail, leisure and hospitality the group suffering from a
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What documents do you need when applying for a business loan?
by Adam Parker • • 0 Comments
Originally written by Adam Parker on Small Business
Applying for a loan may seem daunting once you’ve decided to borrow finance. That’s why it’s always important to have the right business documents prepared before you do so.
Documentation varies depending on what type of lender you’re looking to borrow from. With a business loan from a bank, you are likely to be required to provide more documents to limit risks, such as a business plan or insurance. Other lenders might require less.
Brokers who act as an intermediary between the applicant and the lender offer an online application that further reduces the amount of documentation needed.
>See also: Best UK small business accounting software 2020 – review guide
Business bank statements
Business bank statements are an essential document used to verify the income and the outgoings of your company. The statements usually consist of a summary of your transactions which helps determine your spending and income. These are typically produced every month.
Financial accounts
Financial accounts are necessary for the lender to gain a clear insight into the company for the full financial year. They allow lenders to see a greater picture of the company, rather than working solely from bank statements alone.
For example, six months’ worth of
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Cashplus plans to lend £400m to small business from next year
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
EXCLUSIVE: Cashplus, one of Britain’s longest-established digital challenger banks, plans to lend £400m to small businesses over five years.
The fintech plans to have a 10pc market share of all new UK business accounts by 2024, compared with the 7pc share it already has today.
Cashplus applied to become a full-blown bank last year and expects to be authorized in Q1 2020 with the aim of becoming the specialist bank for small business. It already has around 75,000 business accounts.
>See also: Co-operative Bank to revolutionise small business banking offer
Unusually for a challenger bank, Cashplus has been in profit for the past eight years. In 2018-19 it generated £46.5m in turnover – a year-on-year increase of 19pc.
Should its banking licence be approved, Cashplus will fund its SME lending through the £500m of deposits it has built up since its launch in 2005.
Rich Wagner, chief executive of Cashplus, said: “The day we become a bank we will be able to unlock £400m of money and be able to lend that out to overlooked SMEs, which will almost supercharge our growth.”
Today, Cashplus has 250,00 customers, of which nearly one third are startups and entrepreneurs.
Since launch, Cashplus has expanded
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Co-operative Bank to revolutionise small business banking offer
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
EXCLUSIVE: The Co-operative Bank plans to expand its Co-op small business banking offer over the next year following its £15m grant funded by RBS.
Last month, the Co-op announced that increased its lending to small business customers for the first time in six years as it seeks to cast off its past problems.
The bank is matching the £15m Banking Competition Remedies grant with £17m of its own money.
See also: Nationwide wins £50m prize to help boost small business banking
The bank is the UK’s seventh biggest provider of loans to small businesses but put the brakes on lending in 2013 after discovering a £1.5bn hole in its finances that threatened its survival.
Donald Kerr, managing director of SME banking, told Small Business that the bank will:
Put a small-business focused relationship manager back into branches
Introduce same-day business bank account opening next year
Modernise its online banking platform, making it much easier for SMEs to integrate online accounting packages
Launch a mobile app for business customers next year
Introduce its own-brand accountancy package in partnership with a Manchester-based fintech
Offer a three-month cash flow facility based on transaction history
This is in addition to offering 30 months’ free banking to new customers in
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HSBC adds billions to its £14bn small business loan fund ahead of Brexit
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
HSBC has added another £2bn to the £14bn pot of its small business loan fund, which it launched this time last year.
The bank says the increased fund is part of its British small and medium-sized businesses navigate Brexit and help them grow.
According to HSBC’s own research, 28pc of businesses have done nothing to prepare for Brexit.
Since launching its initial SME Fund in 2014, HSBC has committed more than £60bn to UK SMEs.
This year’s fund, which is HSBC’s largest to date, includes increased ring-fenced pots for international businesses and for the agriculture sector because they were both fully utilised last year.
See also: Best small business loans in the UK
The amount of money ring-fenced for companies that want to grow overseas has been doubled to £2bn, while the agriculture pot has increased to £1 billion from £300 million last year.
Almost one fifth (19pc) of businesses surveyed by HSBC have looked at opportunities to trade outside of the EU after Brexit.
Regional allocations across England, Wales, Scotland and Northern Ireland ensure that companies throughout the country can benefit the fund.
HSBC was unavailable to say how much of last year’s £12bn small business loan fund allocation has been
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Knight Capital to open London office offering small business loans
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
EXCLUSIVE: Knight Capital, the Malaysian small business financier, is opening a London office to finance British small businesses.
Kuala Lumpar-based Knight Capital hopes to lend around £1.5m to around 15 to 25 small businesses in its first year through its UK offshoot Knight Credit.
Products on offer will include term loans, bridging loans and working capital with no minimum amount.
See also: Best small business loans in the UK
The implication is that it will be lending between £60,000-£100,000 a time to small businesses, although Knight Credit says it can go as high as £3m.
Knight Credit sees an opportunity to come into the UK market post Brexit, especially as it sees an opportunity for supply-chain finance given the inevitably more complicated red tape surrounding imports and exports.
Samreet Singh Randhay, who will be running the London office when it opens its doors on November 1 – the day after the UK is due to leave the European Union – said: “With Brexit coming, there will be a lot more financing required because of the UK’s vision of being self-sustaining.”
Singh stresses that, unlike other small business lenders which stress ease of applying for loans online and fast decisions, what
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How to prepare your application for a business loan
by Partner Content • • 0 Comments
Originally written by Partner Content on Small Business
Deciding to take out a loan is a big step for any business, especially for smaller enterprises and start-ups. Whether you need funding to cover any temporary cash-flow shortfalls, or to invest into your business to allow it grow and reach the next level, there are a number of considerations every prospective borrower will need to look at.
Of course, businesses will need to determine exactly how much they want to borrow, but this is only the start of the lending process.
Choosing your lender
Although a high-street bank may be the first loan provider that comes to mind, there are a number of other options that may be able to offer funding better suited to your needs.
You may want to use an online business loan marketplace such as Know Your Money, which is a one-stop-shop for business lending featuring high-street banks such as NatWest and Royal Bank of Scotland or innovators such as Spotcap, Esme and Iwoca.
Alternative lenders
This umbrella term encompasses the variety of challenger banks and fintech lenders, including peer-to-peer platforms, which can now offer competitive loans to businesses. Over the last few years their popularity has risen among businesses looking for extra funding,