26 March 2020
What happens if the government’s financial support is not enough? No sooner have we got to grips with one change from COVID-19 than something else happens and we have to start again. Most hotels have now closed completely, but a few remain operational as a building to support NHS staff, the homeless and others in need. Working with an advisory expert, Deborah Heather of Quality in Tourism has put together this practical guide to navigating the financial support available, which is correct at the time of writing on 25 March 2020.
We all know the basic facts about COVID-19; hotels have had to shut and they’re not going to be open anytime soon – but that doesn’t mean all your operational costs have gone too, nor is it clear how long you will have to survive with the closure. The government has stepped into the breach with a number of emergency measures to help keep businesses afloat even if you’re not operational, but what if that isn’t enough?
First off, let’s recap the Government’s solutions:
This is as good news as we’re going to get at the moment in what is an unprecedented incident, but what happens if all of this is not enough? What other options are there aside from filing for insolvency? Well, the government is also providing £330bn for state-backed loan support, as part of the Business Interruption Loan Scheme, which will help lenders to provide loans, overdrafts, invoice finance and asset finance, with 80% backing from the government. You / your business will remain 100% liable for the debt, and you will still need to provide a personal guarantee in most cases, but the government will pay interest and fees for up to 12 months and the 80% backing they are giving lenders may help ensure that a ‘no’ credit decision becomes a ‘yes’.
I’ve been speaking to former banker Steve Murcer about how businesses can help ensure they are supported by their bank and he had some great advice. Steve comments “Everyone is in this together and banks are supporting customers to keep businesses trading, ready for when things return to normal. The very very important thing to note is that the same pressure your business is under, the banks are under too. They are grappling with home working, dealing with legislation and guidance that’s changing almost daily, coping with increased staff sickness, and have higher work volumes than ever. My core advice is to apply for help as early as possible and ensure you have done absolutely everything in your power to make the bank’s job as easy as possible! You’ll get an answer much faster and are more likely to get help when you need it.”
Here’s Steve’s Top Tips for getting financial support:
With unprecedented levels of financial support, banks are working exceptionally hard to support their customers, but unlike other sectors the nature of the work they do means it is difficult to employ emergency relief and additional staff to help with the unprecedented levels of demand from both businesses and individuals. You can make their job as easy as possible by:
It really is essential that you make things as easy as possible for them to maximise your chances of getting the support you need!
One final point on the finances is that it’s always best to avoid borrowing money unless you really really have to. First job is to speak to your creditors, landlords and pending suppliers and see what can be renegotiated or delayed and what payment plans etc. can be put in place. If you then really have to borrow, you’ll be able to prove you’ve taken all the possible steps, which will help stand you in good stead.
What else do you need to be thinking about?
There’s plenty that you can be looking at, but one essential top tip I saw the other day is to go through your insurance policy with a fine tooth comb. Very few, if any, businesses will be covered for what has already happened, but you need to make sure you are protected for what is to come. For example, many business premises are not covered if their building is unmanned / unoccupied for a period of more than 30 days. During normal business operations this should be fine, but it’s possible your insurance will end up invalidated because you’ve been forced to close down. My advice is go through it in detail, think about the business risk and then contact your insurer to ask for their help in maintaining your cover!
Quality in Tourism assess thousands of accommodation providers globally each year. To find out more about their assessments, gradings and the future of registration please visit www.qualityintourism.com.