Small businesses appear to be shunning the government’s finance scheme aimed at helping them weather the recession, new research suggests.
A survey by financial adviser Clifton Asset Management found that nearly a third of small business owner-managers had never heard of the Enterprise Finance Guarantee (EFG) scheme, while of those that had, 93% saw ‘little point’ in applying for it.
The EFG scheme was introduced in January to secure bank lending to businesses with a turnover of up to £25m.
Under the scheme, successful applicants could get loans of up to £1m but out of the small percentage of businesses who applied for EFG help, the survey found that only 1% was granted funding.
Read more: http://www.accountancymagazine.com/croner/jsp/Editorial.do?channelId=-305535&contentId=1337608
Source: http://www.accountancymagazine.com
www.ukba.co.uk
Showing posts with label enterprise finance guarantee scheme. Show all posts
Showing posts with label enterprise finance guarantee scheme. Show all posts
Monday, 21 September 2009
Sunday, 1 February 2009
Managing your cashflow
‘Cash is king’. It is a cliché – and like many clichés it is true. The reason why most businesses fail is that they run out of cash to pay their bills. They run out of cash because they have failed to keep on top of cashflow.
To keep in control of cashflow businesses need to have the right management information and systems in place – and to act on warning signs before they become problems.
Of course all businesses have systems in place. It is just that in an economic downturn these may need to be tightened, particularly as 8 in 10 businesses say they are seeing an increase in the number of their customers paying late.
Remember being paid – and paid on time – is not a given
• If you are worried about the customer paying on time – or at all – consider stage payments or even cash on delivery to reduce your risk of bad debts
• Set your terms of business before doing business – and put them in writing. You will not be paid in 30 days unless your customers know that’s what you expect
• Do credit checks before doing business – and monitor late payments. If companies are taking longer and longer to pay, find out if there is a problem. Do not wait until they leave you with a bad debt
• Encourage prompt payment. Consider charging interest on late payments (your legal right on debts outstanding after 30 days) or – if your profit margins allow – offering a discount for prompt payment
• Invoice promptly – and once again make payment terms clear
• Check the customer is happy – there may often be a reason for late or non payment. Never give a customer a reason not to pay
• Make it easy for them to pay by offering as many ways of getting paid as you can. BACS payments are fast and attract lower bank charges. Or a standing order can be used if they pay the same amount regularly. With cheques your late payers can always use the excuse “it’s in the post”
• Contact customers to check they received the invoice and then find out when they are going to pay
“The key thing is certainty – knowing when you are going to get paid so that you can adjust your cashflow forecasts accordingly. If you know a customer is going to take 75 days to pay, you can plan ahead. If you expect payment with 30 days and the payment takes 75 days your business risks running out of cash to pay its outgoings – and that is when businesses run into difficulties.”
Phillip King, Director General, Institute of Credit Management.
Smart credit management is…
• Ringing on day 40 to check you will be paid on day 60
Lax credit management is…
• Waiting until day 65 to ask why you were not paid on day 60
Getting it right
• Many businesses concentrate on getting orders in, but getting paid should also be a priority
Communication is key
• At times like this you need to cement your key relationships with customers – as well as your suppliers and your bank – as this could be vital to the survival of your business. It is not just about keeping customers happy. It is about working together and understanding their needs. Good communication will also help you to find out if
they are having problems that could impact on your business.
[Extract from Trading Through The Economic Downturn - published by NatWest - full Guide available by clicking here]
http://www.ukba.co.uk
To keep in control of cashflow businesses need to have the right management information and systems in place – and to act on warning signs before they become problems.
Of course all businesses have systems in place. It is just that in an economic downturn these may need to be tightened, particularly as 8 in 10 businesses say they are seeing an increase in the number of their customers paying late.
Remember being paid – and paid on time – is not a given
• If you are worried about the customer paying on time – or at all – consider stage payments or even cash on delivery to reduce your risk of bad debts
• Set your terms of business before doing business – and put them in writing. You will not be paid in 30 days unless your customers know that’s what you expect
• Do credit checks before doing business – and monitor late payments. If companies are taking longer and longer to pay, find out if there is a problem. Do not wait until they leave you with a bad debt
• Encourage prompt payment. Consider charging interest on late payments (your legal right on debts outstanding after 30 days) or – if your profit margins allow – offering a discount for prompt payment
• Invoice promptly – and once again make payment terms clear
• Check the customer is happy – there may often be a reason for late or non payment. Never give a customer a reason not to pay
• Make it easy for them to pay by offering as many ways of getting paid as you can. BACS payments are fast and attract lower bank charges. Or a standing order can be used if they pay the same amount regularly. With cheques your late payers can always use the excuse “it’s in the post”
• Contact customers to check they received the invoice and then find out when they are going to pay
“The key thing is certainty – knowing when you are going to get paid so that you can adjust your cashflow forecasts accordingly. If you know a customer is going to take 75 days to pay, you can plan ahead. If you expect payment with 30 days and the payment takes 75 days your business risks running out of cash to pay its outgoings – and that is when businesses run into difficulties.”
Phillip King, Director General, Institute of Credit Management.
Smart credit management is…
• Ringing on day 40 to check you will be paid on day 60
Lax credit management is…
• Waiting until day 65 to ask why you were not paid on day 60
Getting it right
• Many businesses concentrate on getting orders in, but getting paid should also be a priority
Communication is key
• At times like this you need to cement your key relationships with customers – as well as your suppliers and your bank – as this could be vital to the survival of your business. It is not just about keeping customers happy. It is about working together and understanding their needs. Good communication will also help you to find out if
they are having problems that could impact on your business.
[Extract from Trading Through The Economic Downturn - published by NatWest - full Guide available by clicking here]
http://www.ukba.co.uk
Tuesday, 27 January 2009
New SME funding - EFG Scheme
It has been announced that as of the 14th of January 2009 until March 2010 there is going to be an new initiative called the Enterprise Finance Guarantee (EFG) Scheme which will assist businesses with a turn over of up to £25 million with a loan of up to £1 million, 75% will be guaranteed by the Government and 25% will be unsecured and at the banks’ risk. This will of course be based on the applicants meeting certain criteria and for companies that are creditworthy.
There are some very interesting changes to this scheme compared to the Small Firms Loan Guarantee Scheme as the SFLG could not be used to cover debt; many of our clients seek a way of consolidating various debt lines that they have and this was impossible to do with the old scheme. At first sight the sector industries that are ineligible seem to be greatly scaled down, we will of course have to wait to get final information.
What is EFG Scheme?
This is the Government's new £1bn Enterprise Finance Guarantee (EFG) Scheme will support up to £1.3bn of new lending by banks to eligible SME’s with working capital or investment needs.
Which companies will benefit from the scheme?
The EFG Scheme is going to be open to businesses with an annual turnover of up to £25m, seeking loans of £1,000 to £1m, which can be repaid over a period of 10 years.
Most businesses in most sectors will be eligible for the scheme. However, state aid rules exclude businesses in the agriculture, coal and steel sectors
What sorts of lending will this cover?
The guarantee can be used to support refinance existing loans, new loans or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital needs.
How much of the loan is the Government going to guarantee?
The Government will guarantee 75 per cent of the loan.
How long will the scheme run for?
EFG will be available from Wednesday 14 January 2009 and will be available until March 2010.
Who are the participating lenders?
Barclays
Clydesdale/Yorkshire Bank
HBOS
HSBC
Lloyds TSB
RBS/Natwest
Northern Bank
http://www.ukba.co.uk
There are some very interesting changes to this scheme compared to the Small Firms Loan Guarantee Scheme as the SFLG could not be used to cover debt; many of our clients seek a way of consolidating various debt lines that they have and this was impossible to do with the old scheme. At first sight the sector industries that are ineligible seem to be greatly scaled down, we will of course have to wait to get final information.
What is EFG Scheme?
This is the Government's new £1bn Enterprise Finance Guarantee (EFG) Scheme will support up to £1.3bn of new lending by banks to eligible SME’s with working capital or investment needs.
Which companies will benefit from the scheme?
The EFG Scheme is going to be open to businesses with an annual turnover of up to £25m, seeking loans of £1,000 to £1m, which can be repaid over a period of 10 years.
Most businesses in most sectors will be eligible for the scheme. However, state aid rules exclude businesses in the agriculture, coal and steel sectors
What sorts of lending will this cover?
The guarantee can be used to support refinance existing loans, new loans or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital needs.
How much of the loan is the Government going to guarantee?
The Government will guarantee 75 per cent of the loan.
How long will the scheme run for?
EFG will be available from Wednesday 14 January 2009 and will be available until March 2010.
Who are the participating lenders?
Barclays
Clydesdale/Yorkshire Bank
HBOS
HSBC
Lloyds TSB
RBS/Natwest
Northern Bank
http://www.ukba.co.uk
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