Success Story: Bounce Back For A London Dry Cleaner
A solution to help a dry cleaning business bounce back - when the bank could not help
TL:DR Dry cleaning businesses have been hit hard by Covid, so when one London dry cleaner was struggling to keep their business afloat, we stepped in to help with a Bounce Back Loan of £50,000 at 2.5%, with 12 months initial repayment freeze, when their own bank could not.
“People don’t need their work clothes cleaned if they are not going into work, or their going-out clothes cleaned if they are not going out. My dry-cleaning business was hit hard by Covid and the lockdown - and then I found that my bank could not help me.”
Covid has meant problems for every business sector. Dry cleaners have been particularly hard hit.
It is easy to see why. Workwear is the lifeblood of many dry cleaners. Suits and jackets may need dry cleaning - but with many businesses have shut down for the duration and others are adopting a work from home policy, work clothes are simply not being worn.
It means there was no demand to have business clothes cleaned - while a lack of nightlife meant that there was no demand for cleaning leisure clothing either. That meant serious problems for dry cleaners up and down the UK.
We were recently approached by the owner of a small London dry cleaning business who had seen business fall to close to zero since the lockdown began.
“I was allowed to open but customers just were not coming in. They didn't need their clothes cleaned because they were not going to work.”
The business was small and acted as an agency for a large commercial dry cleaner which actually did the cleaning. But their position close to a tube station meant that they had a regular stream of customers.
However, with the lockdown, those customers simply stopped coming in. With rent and other overheads, any available cash was being drained away - and there was already little cash left in the bank to ride out the downturn.
But the owner saw that there could be hope for his business - if he could take advantage of the government’s Bounce Back Scheme to provide the cash he needed.
About Bounceback Funding
The Bounce Back Loan Scheme (BBLS) was designed to enable smaller businesses to access finance quickly during the Coronavirus outbreak. The scheme helps small and medium-sized businesses borrow between £2,000 and up to 25% of their turnover, and the maximum loan available is £50,000.
It was designed to be faster and simpler to access than the government’s CBILS initiative, which was intended to provide larger sums, and for businesses with a higher turnover than our dry cleaner client.
The Bounce Back Scheme offers loans of up to £50,000 as opposed to the £5million available under CBILS and should be a great deal simpler - and faster - to arrange. Like CBILS, the government will cover interest and fees on a loan for the first year. But the big difference is the interest rate which, unlike the uncapped and frequently punitive rates offered by some lenders under CBILS, are capped at just 2.5%.
This means that finance secured under a BBL could cost very much less than that under a CBILS loan. As businesses start to emerge from the crisis, these lower costs can make a big difference to their long-term viability.
KEY FEATURES OF THE BBL SCHEME
- Finance of up to £50,000 - Loans ranging from £2,000 up to 25% of a business’ turnover are available - ideal for smaller businesses
- No repayments for 12 months - The government pays interest and fees for the first year, helping borrowers get back on their feet
- No security required - The scheme provides the lender with a full (100%) government-backed guarantee against the outstanding balance of the finance (both capital and interest) - making lending almost risk-free
- Fixed interest of 2.5% - All businesses will benefit from the same, affordable rate of interest - providing a very competitive way to borrow compared with standard commercial loans
- Borrow for up to six years - The length of the loan is six years but early repayment is allowed and without early repayment fees
How we can help
Bounce Back loans are provided by commercial lenders, including banks. But not all banks are easy for small businesses to deal with.
We have found that many smaller businesses will need help, not just to get through the crisis, but to access the funding the government has promised to help them do so. As the UK leaders in business funding for the SME sector, we are in the ideal position to help.
Our client found that when he went online to his bank to apply, his application was lost by the system.
“I was seeing error messages - and there was no helpline for me to call.”
Frustrated by the lack of help from his bank, he called us at Rangewell instead. We can often use our contacts at all the major lenders - including high street banks - to sort out problems when things go wrong.
In this case, we helped our client get around the problems with the website and fast-tracked the application. It meant our client had the Bounce Back loan he wanted, agreed in a matter of days and the funds were made available for him to draw down in under a week.
“Going to Rangewell not only got me the funds I needed, but it also got me them in a fraction of the time the bank usually took when everything was working properly."
Funding - fast
- Bounce Back loan of £50,000 at 2.5%, with 12 months initial repayment freeze
- The client had the funding he needed for the project - with nothing to pay back for 12 months
The client was able to deal with his ongoing financial commitments, and with people starting to go back to work as lockdown is easing, he is welcoming customers back into his business again.
Rangewell finds the financial solutions that your business needs
The Rangewell service is easy to use - and lets you talk to a funding expert to get 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 work out the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present.
We can help you see if a CBILS or Bounce Back Loan might provide the answers you need - or whether there is another form of funding which could provide a better answer for your particular circumstances.
Then we will search the entire lending market to find the most appropriate lender and to make the application for the loan you need.
It can be the simplest way to find the lifeline you need for your business.
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