Purbeck Launches COVID-19 Help Guide for SMEs

Loan payment holidays are the main mitigation measure being used by small businesses to help sustain cashflow during the COVID-19 pandemic according to a snapshot of the market by Purbeck Insurance Services, the provider of personal guarantee insurance to small business owners across the UK.  46% of the insurance provider’s policyholders are taking measures to manage their cashflow with loan repayments the top tactic being used by 47%.  25% are using HMRC deferral and 19% are using the CBIL scheme. 

Purbeck has launched a free online guide to the support packages and measures SMEs can consider during the Covid-19 pandemic and beyond. 

Todd Davison, MD of Purbeck said: “Our data shows many small businesses have been proactive and agreed payment holidays with lenders rather than using new loan facilities.  We believe this is largely down to a reluctance to take on more debt, although access to the CBIL scheme has been difficult.  

“We welcome the launch of the new bounce-back scheme but businesses that have accumulated losses of more than 50% of their issued share capital as at 31 December 2019 won’t be eligible[i] putting some high growth businesses that have been trading for more than 3 years out of scope, although they may be eligible for the Future Fund scheme.”

The COVID-19 Help Guide is prefaced by the actions business should take to assess their financial pressures, including key financial ratios.  It then provides an overview of the range of Government packages to help businesses trade through the current period of uncertainty, disruption and financial pressures caused by COVID-19 including:

Todd Davison adds: “We are speaking to small business owners every day, talking through their options and supporting them through this hugely stressful period.  We estimate that around half a million small business owners in the UK[ii] are acting as personal guarantors for business loans with their home, life-savings and livelihoods now at high risk. The guide is intended to summarise all the measures introduced by The Government to date and will be updated on an on-going basis as and when further measures are introduced to limit the adverse impacts of COVID-19 on small businesses.”

[i] The European Commission’s Temporary Framework for State aid measures states businesses that have accumulated losses of more than 50% of their issued Share Capital as at 31 December 2019 are  “Undertaking in Difficulty” and are not eligible for the scheme - so start-ups, tech-focused or high growth businesses may not be able to access the new bounce back scheme.

[ii] 1.4 million UK small businesses have external funding in place according to the BDRC Finance Monitor.  Of these businesses, Purbeck estimates 30% - 40% will be backed by a Personal Guarantees by the business owner/s or directors.