Success Story: Dealing with commitments that could bring down a festival businessPublished on 12th August 2020 2020-08-12T11:00:00+00:00 - Last update on 16th August 2020 2020-08-16T22:51:14+00:00
Dealing with commitments - when predicted income is cut off
TL:DR Despite government help, one business was concerned that they would struggle to cope with their outgoings when their festival season was cancelled due to Covid. We helped to provide £250,000 of Working Capital Finance using the CBIL Scheme, at just 3% with 12 months payment holiday and 5 years to repay, meaning that the business could concentrate on 2021 bookings rather than their current cashflow concerns.
“Sometimes the survival of your business depends on funding, knowing how to apply for it and who to apply to - and that’s why you need Rangewell.”
What can you do if your business has only one payday a year - and Covid-19 means that day is cancelled? The answer is to call Rangewell.
Covid has caused problems for every business sector. But while some have been simply suffering from a slowdown in suppliers or with customers who are thin on the ground, others have been forced to cease working entirely.
Things have been particularly difficult for those involved in the £multi-million summer festival business.
There are around 250 music festivals in the UK each summer, worth in the region of £2.6billion a year combined, bringing in tourism and boosting local economies. Covid and lockdown meant that summer festival season was shut down completely - causing a financial disaster for those businesses involved in the sector.
We were approached by the organiser of a major annual festival in an important seaside town.
“I have been running the event every year for the last twelve years. People love it and they come for miles, and we are getting bigger and better every year. 2020 should have been our best ever - but then Covid happened ”
With no festival, there would be no revenues for the year - but the problem was worse than that.
"The music business works on pay or play. That means, once you book an artist, you are contractually bound to pay even if your event is cancelled. I had some major acts booked for the festival and they would all need paying. I had some insurance of course - but it wasn't going to provide the cover I needed."
The government's Coronavirus Business Interruption Loan Scheme - or CBILS - looked as though it might provide a lifeline.
CBILS was designed by the government to provide financial support to smaller businesses losing revenue across the UK as a result of the COVID-19 outbreak. The scheme can provide loans of up to £5million, but in most cases will be much less - and crucially, with nothing to repay for the first 12 months.
However, when our client approached his bank, they were unable to provide him with funding under CBILS - because they did not see his business as viable.
So he talked to our funding experts instead.
We saw that he did have problems with affordability and that, according to the strict lending criteria set by many high street banks, he would not be eligible for CBILS. But we were able to leverage our connections with an established independent bank which has a long history of supporting the arts.
However, we also saw that his business was viable and that there were, in fact, ways to present his figures in such a way that they could make his business eligible - if the right lender was approached.
We helped our client complete an application for £250,000 - the maximum that can be offered under CBILS without a personal guarantee - and approached our contact at the lender.
By making use of the government's guarantee under CBILS the lender was able to provide the loan with 5 years to repay - after the initial 12 month repayment holiday - at just 3%. With the usual rate for this scale of loan closer to 10%, we recognised that this deal provided a lifeline for the business, it was something of a bargain. it would provide the Working Capital Finance he needed to keep his business going.
It meant that the promoter could pay off his booked performers and other obligations - and start planning next year’s festival.
“Rangewell found me the cash I needed to keep the business afloat. I have the cash I need to cover my overheads while we are suffering from lockdown, and I will not be losing any of my team or my equipment. That’s going to be important because we are already looking at bookings for next year.
There will be a festival again next year, and it will be better than ever, thanks to Rangewell.”
The finance provided:
- £250,000 at 3% with 12 months payment holiday and 5 years to repay
- The client had the funding he needed to keep his business solvent, pay off his 2020 commitments and start again next year
Rangewell finds the financial solutions that your business needs
Many business sectors have hit problems due to Covid - and are still struggling to survive, even though the government's schemes are there to help. But sometimes it is simply a matter of knowing how to apply, and who to apply to.
At Rangewell, we can help you access the funding you need to keep your business afloat.
Our service is simple to use - and means you can chat to a funding expert and find a solution that is planned around your business needs.
Just call us and one of our Business Funding Experts will be able to discuss your options and then work with you to find the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present.
We’ll search the entire lending market to find the most affordable solutions to your funding needs - and in most cases, our services are absolutely free.
Keeping your business afloat with help from Rangewell
Individual arrangements tailored to your circumstances
Adverse Credit – no problem
Repayments geared to your turnover
Expertise in funding for your sector
Bounceback and CBILS expertise
Talk to Rangewell – the business finance experts
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