Funding for a hotel industry in crisis
TL:DR The hotel industry is in crisis. Covid and lockdown mean that travellers are not travelling and guest numbers have fallen to almost nothing, and the latest quarantine rules are making summer holidays in 2021 even less likely to happen. At Rangewell, we have solutions which can help - and specialists who can put those solutions to work to provide a lifeline for your hotel business. The world-wide disruption caused by the COVID-19 pandemic has created a very real crisis for the hotel industry. Although there was a glimmer of hope as the first lockdown was gradually eased in the second half of last year, the return of the disease with increased infection rates has meant that there are simply no guests to welcome. A very small number of business travellers may still need rooms, but with no tourists - and no end to the crisis in sight - the future for the hotel industry is looking challenging. According to the latest government regulations to combat the spread of Covid, almost all hotels, hostels, guest houses and campsites must stay closed at least until the current lockdown emergency is over. Of course, there is hope for the future. The vaccines now being administered could spell the end of the coronavirus - but their effect will not be felt for months - and it is already looking as though 2021 will see little in the way of tourist business, even if the recovery has begun. It is clear that the hotel industry is now in crisis and that it will be some time before it returns to business as usual - and during that time, the financial challenges will be growing. What are the challenges? Hotel owners and their financial backers have had to look hard at the impact on the industry, their businesses and their funding arrangements. At Rangewell, as experts in business funding and with a specialist teaming working to find financial solutions for the hospitality industry, we look at exactly what the challenge may be - and what solution can be available. “The simple fact is that we have no guests coming in - and that means we have no income coming in either. Usually, January and February tend to be slow, but we should be looking back on a lucrative Christmas period, with everything from works parties and family get-togethers to people just wanting to get away for a break. This year, we had none of that to look back on, and bookings for the next month are non-existent.” Hotel owners need to come up with new strategies including reaching out to lenders, extending the term of any existing loans and requesting interest payment holidays to ease cashflow concerns. At Rangewell we know that many hotel owners have done what they can to weather the Covid storm. Putting staff on furlough is one way of cutting costs - but dealing with existing finance commitments is a major cost, and together with utility bills and vital maintenance mean that there is still a steady drain on any reserves that they may have. What can you do? Have an extended cash flow forecast for the next six months. Include downside scenarios to understand critical cash points and any breaches of lending covenants. Manage your payments to suppliers. Minimise all discretionary operational and capital expenditure. Postpone maintenance and other capital expenditure where possible. Put in place an advanced revenue management system and pricing models to respond to market developments quickly. Assess the equity or debt funding sources available. Be transparent towards existing lenders and involve them in the mitigating procedures and continuity plans. Apply for the tax refunds and other financial relief measures. Looking for solutions to help your hotel through the crisis? Contact our team today for ways to help your business survive. The biggest problem may be providing working capital. Even where hotels are closed, there will still be substantial costs to cover ensure that security and health and safety standards are maintained. For hotel owners, one of the key questions will be how to fund the key working capital requirements of the business at a time when income has completely dried up. The Coronavirus Business Interruption Loan Scheme (CBILS) may be able to provide some support. It is a government-sponsored scheme which can deliver loans of up to £5million from high street banks which will be interest-free for the first year, and have recently been extended to repayment terms of up to 10 years with nothing to repay for the first 12 months. The UK Government will provide the lenders with a guarantee of 80% of the amount of each CBIL loan. For businesses with a higher turnover the Coronavirus Large Business Interruption Loan Scheme can allow borrowing of up to £25m. The government is committed to supporting businesses through the lockdown, and these loans should be a powerful tool to help businesses survive. However, these are commercial loans and lenders are required to carry out full underwriting process on loan applications and ensure that hotel owners satisfy the requirements of the scheme. In practice, many hotel owners have found the CBILS scheme difficult to access. Initially, at least, those lenders who offer the scheme were inundated with requests for funding and had to process those applications with their entire team working remotely, whilst also having to deal with requests for covenant waivers and hotel closures on their existing loan portfolio. However, although the government is underwriting CBILS, many lenders will not advance funds under the scheme to the hospitality sector. Why will lenders not lend? “Our bank manager wanted to be helpful, but when we saw him, he looked at our figures, and said that his hands were tied, and he was sorry, but he could not help us.” The problem seems to be that the lenders have become reluctant to lend to many sectors because of the uncertainties of Covid. They base their lending decisions on risks, and with no sure end in sight for the crisis, they see that some sectors have a future that is at best unpredictable - and which could be financially unsustainable. Some lenders believe that the hospitality industry - and particularly hotels of all sizes - are particularly vulnerable. Some, we have found, have placed blanket bans on lending to the sector, and even with government support via CBILS and the smaller and more agile Bounce Back Loan scheme, they cannot offer the financial support that is so desperately needed. In fact, there is acceptance in the hotel lending community that hotel owners will breach the financial covenants in loan agreements. Some lenders have already adopted a flexible approach and waived financial covenants and provided repayment holidays for an initial period until hotels re-establish trade. But new lending may be particularly difficult to secure. Despite the doom and gloom from some lenders, business sector analysts, Knight Frank, have estimated that the UK hotel will rebound strongly once the economy recovers. It anticipates a V-shaped, stepped recovery with occupancy growth stronger during the initial phase of recovery and rebound in revenue per available room to fully recover once travel restrictions are eased and long-haul inbound visitors return. It means a growing financial crisis for the hotel industry. Why Rangewell? At Rangewell, we are working to find solutions for hotels that have run into problems because of the lockdown. We have a specialist team with expert knowledge of the sector, and we know lenders that may still be prepared to advance funds. Unlike most business funding services, we can search the entire lending market to find funding for our clients. Our service is personal. We assign a finance expert to work with everyone who approaches us, who can discuss needs, and often, suggest unexpected ways to offer funding solutions. Then, we can use some sophisticated software to identify the most appropriate sources of funding for each case. Our Rapid Algorithmic Matching Platform (RAMP) technology can quickly identify a list of lenders which might be willing to provide finance to the borrower, based on our understanding of the scale of the needs and the amounts required. The size of the loan required, the sector and the credit status of each client all influence which lenders who are most likely to be receptive to an application. By automating the process, we can search the entire lending market in seconds. Our fintech platform system can also generate a digital fact-find, which means we can sense-check proposals quickly and efficiently. Once we have our shortlist of appropriate lenders, we can approach our contacts within those banks and other financial providers. Armed with data and documentation updated in real-time, we can support lenders throughout the underwriting and due diligence process. Because of this, we can accelerate the process of completing and drawing down the loan. It not only means that we can find lenders prepared to advance funds when others cannot, but it also ensures we can streamline the application process - allowing the funds to be available for drawdown in the shortest possible time. Rangewell’s APIs into Companies House and the Credit Agencies, as well as its automated fact-find technology, provides clear insight into each client and their requirements. We are independent and we know the entire lending market. That means we can take a view that will put your interests first - and if you have not been successful because of your bank’s lending policies, we will work to find one that is more sympathetic. Ready to find the answers to your funding needs? To find out more call the Rangewell Covid crisis funding helpline on 020 3318 2613 or email [email protected] Talk to Rangewell – the business finance experts
Coronavirus and your sole trader business
The coronavirus affects not just people, but every business in the land - from large corporations - to sole traders. Every one of them could suffer from a lack of income. Larger businesses may have reserves of cash to call on - but what can you do about the financial effects if you are a sole trader? The coronavirus is unprecedented. Across the UK, businesses have been forced to close, lockdowns are in place, and we are living under stricter rules ever seen since the end of the second world war. It is a frightening time for everyone – but particularly if you have a small business to run. Your business may lose revenue for several reasons. Even if you are not forced to close, customers might not come in. You could lose access to suppliers. In some cases, you may even be denied access to your business by a police or council edict. Government Financial Support for Sole Traders The Government is releasing the details behind their support packages on an almost daily basis. They have already committed £350bn - and they may be prepared to commit more. Some is earmarked for large businesses but some, at least, is designed to support SMEs - and if you are a sole trader, that means you could benefit. There are several aspects to the schemes: Self-Employment income support scheme This scheme is equivalent to the PAYE furlough scheme but for sole traders/partners. To qualify you must have: Self-employed profits of less than £50,000 Submitted an income tax self-assessment in 2018-19 Traded in 2019-20 Been impacted by COVID-19 Intention to trade in 2020-21 If you qualify, you’re eligible for a taxable grant of up to 80% of your average profits from the last three years, dating back to 2016-17. The amount will be capped at a maximum of £2,500 per month for three months and paid in one payment directly to your business bank account. So for example: Average taxable profits of £40,000 per annum at 80% = £32,000 Equates to a monthly sum of £2,667 capped to £2,500 This amount will be added to your Sole Trader income from the rest of the year and taxed as normal HMRC will contact you directly if you are eligible and invite you by post. Beware - they will not text, call or email, and if you receive any communications in that way you should expect them to be a scam. If you have not filed your 2018-19 self-assessment, you can do so up to the 23rd April 2020 without incurring late filing penalties. VAT deferment VAT is a big drain on your cash flow that occurs four times a year. The government recognises this and has arranged a VAT concession. VAT-registered businesses with a quarterly balance due between 20th March and 30th June can defer until 31 March 2021. This is the equivalent of a 12-month interest-free loan from HMRC. But remember - if you pay VAT by Direct Debit, you MUST cancel it before payment is due to take advantage of the scheme. Income Tax instalments due 31st July 2020 If you pay by instalments, HMRC has offered to waive the second instalment due 31st July 2020 to 31st January 2021. You do not need to notify HMRC, they will assume you won’t pay. Mortgage deferment This is available for up to three months to anyone not in arrears. Apply to your mortgage provider online. Remember, this can cover your commercial mortgage as well as your homeowners mortgage - you can defer paying off your business premises as well as your home if business is slow. Remember that your interest will continue to accrue. Business Grants This is available to Retail, Hospitality or Leisure businesses using a property for business, e.g. shops, gyms or pubs registered as rateable by the local authority. Rateable values of £15,000 to £50,999 could receive a grant up to £25,000; less than £15,000 up to £10,000. There’s no application and your Local Authority will be in contact if eligible. Business Rates Relief Again, this is available to Retail, Hospitality, Leisure or Nursery businesses. You will not have to pay rates until 1st April 2021. There’s no application and your Local Authority will be in contact if eligible. Contact us today about your needs. Our experts can help you identify the most appropriate types of business funding, and find the lenders who are able to offer them at the most cost-effective rates Government-guaranteed loan scheme Coronavirus Business Interruption Loans (CBILS) of up to £5m will be 80% guaranteed by the Government with a 12-month interest and capital repayment-free period. The loans will be provided through regular high street banks. The application process is online but is taking a long time. Interest rates after 12 months are variable and you may have to give Personal Guarantees for loans over £250,000. The order of guarantee call-off, should you default, is 1st personal guarantee; 2nd government; 3rd bank. This loan may not be the best choice if you have other sources of finance. Loan capital repayment holiday Where you, or your business, already has fixed-term debt it may be possible to arrange a repayment holiday. Halifax and Santander are two examples of banks offering this scheme. Borrowing the money you need The government’s funding schemes are unprecedented and could provide a lifeline to many businesses. But you may find that they cannot provide all the funding you need. Fortunately, there are commercial lending solutions which can help. Of course, in the current emergency situation, some lenders are reconsidering their positions - and some have even withdrawn from the market. At Rangewell, we know the lenders who are still ready to help with your funding needs. Some of the key types of lending that may be important in the next few weeks and months include: Cashflow support funding Cashflow support lending usually takes the form of a short-term Unsecured Loan. You can usually borrow from £1,000-£500,000 – or up to £5m through the Coronavirus Business Interruption Loan Scheme (CBILS). Revolving Credit Facilities Revolving Credit Facilities – also known as Overdraft Replacement - allow you to borrow and repay funds as required. They can increase your financial resources, giving you access to cash as you need it, and with no changes when you do not draw down funds. Asset Refinance and Commercial remortgages Where your business owns solid assets, from tooling to kitchen equipment, you may be able to use Asset Refinance to raise finance against them. These facilities can work as a loan, or as a sale and leaseback. You release the investment you have made in the asset to use again – and they can provide a particularly cost-effective solution for your financial needs. Commercial remortgages can be used in a similar way to raise capital secured on your business premises. Very large sums can be available. Invoice Finance When business is slow, getting paid fast becomes all the more important. Invoice Finance provides an immediate cash payment by the lender when you invoice a customer or client for work done, no matter how long it takes for them to pay. It could help you accelerate cash flow. Getting professional help with your finance needs As a sole trader, you probably can’t call on the same level of financial expertise as larger concerns which is why you need to call on Rangewell. At Rangewell, we help secure all types of funding for all types of business – and during the current crisis, we can provide the quickest way to find the funding you need. We can discuss grants, the government funding schemes - and all the commercial finance that can be made available - including those that are available under CBILS. How Rangewell can help Banks should have more clarity after all the details of the Government's business rescue package were published – but your business may not be able to afford to wait. You may need help now. At Rangewell, we are experts in all types of funding for business, and we can help you find the funding you need now. We understand that it can be vital to act quickly if you are to keep your business afloat in these challenging times. If you have a cash flow problem caused by the coronavirus or any other urgent funding need, call us, and our experts will work with you to find the solutions you need. We have the expertise you need, and we understand the pressures you are under – and our service is absolutely free. Call us at Rangewell on 020 3637 4150 - or email [email protected]
How to support your business during an emergency
In order to generate a reliable income each month, maintaining your business’ day-to-day operations is crucial. But that isn’t always easy. At any point, you may run into challenges that will catch you off guard, threatening your finances or ability to trade. Yet, no matter whether it involves ageing equipment, late payments, unexpected expenses or a slowdown in sales, the two most important steps you need to do is create a plan and ensure that you’re able to act fast. To that end, being aware of what finance solutions are available could be what you need to get your business moving again. All you need to do is choose a product that’s suitable for your business’ needs. Invoice Finance Waiting around to get paid by your clients can be a real headache. But if your business trades using business-to-business (B2B) invoices, you could release up to 90% of the capital contained in any invoice worth in excess of £5,000 - regardless of whether you need money early or the client is late to make payment. Plus, any capital you release isn’t subject to any usage restrictions. This means that you can use Invoice Finance to support anything from late payments, cashflow shortfalls, expenses, utility bills and tax demands to staff wages. In addition, Invoice Finance is available as Factoring and Discounting. Discounting: If your business is able to generate and maintain an annual turnover of at least £100,000, you could be eligible for Invoice Discounting, providing you can keep your ledgers up-to-date and you have an effective credit control system in place. Rather than having your customer (the debtor) pay your business, they’ll make payment directly to the lender. As soon as they’ve fully paid off the money that they owe, the lender will release a balance (e.g. 10% of the invoice) minus costs and fees. Factoring: Meanwhile, if your business has an annual turnover of at least £25,000, you may want to consider applying for Invoice Factoring instead. You’re still required to maintain up-to-date business ledgers, but this option allows the lender to pursue the customer responsible on your behalf, saving you valuable time. Plus, you can also choose to be discrete about the fact that you’re using the services of an Invoice Finance lender. In addition, some lenders may even offer you Bad Debt Protection, safeguarding your business in the event that your customer goes bankrupt or doesn’t settle what they owe. Is there an emergency situation within your business? Need help raising the necessary capital to quickly overcome it? Apply for a Quick Business Loan or Learn more about how your business could benefit. Merchant Cash Advance On the other hand, if your business is able to accept credit and debit card transactions, you could receive an advance based on your future predicted card sales using a Merchant Cash Advance. This unsecured, short-term finance solution works by the lender reviewing your latest card sales for at least 3 consecutive months, allowing them to work out an average. So if your business regularly generates £25,000 in card sales, then the advance could be in the same region, if necessary. Plus, the advance isn’t subject to any usage restrictions, allowing it to be used for anything from cashflow shortfalls, expenses, tax demands, utility bills, repairs to natural disasters. In addition, rather than tying you down to set repayments each month, this type of finance uses flexible monthly repayments instead. This allows the lender to automatically intercept an agreed percentage from each of your card sales until the agreement has been fully repaid. Hire Purchase If your business relies upon a valuable piece of equipment, which has fallen in disrepair as a result of constant use, you can quickly replace it by applying for a Hire Purchase agreement. One of a number of products that come under the umbrella of Asset Finance, Hire Purchase works by the lender purchasing the asset on your behalf from a supplier, which is used to secure the agreement. However, before you can start using the equipment in your business’ operations, you must first pay an Initial Deposit. Subject to negotiation, this usually involves the equipment's full VAT and an agreed percentage of its total purchase price. As soon as the initial deposit has been settled you then need to begin making fixed monthly repayments for the duration of the agreement, which could last up to 5 years, plus interest. Once the agreement has been fully repaid, ownership of the asset is transferred to you. Overdraft Replacement Finally, another popular way of gaining access to emergency funding is through applying for an Overdraft Replacement facility, which could be set up as either a secured or unsecured agreement. This form of funding works in a similar way to a credit card and offers a line of credit, enabling you to gain access to an allowance based upon your business’ past income. Although you’re not obliged to draw down any of the funds that the allowance makes available, anything that you do use will need to be repaid within 30 - 90 days (depending on the agreement) and is subject to interest. As soon as this has been repaid, you’ll instantly gain access to the allowance again on a revolving cycle. Plus, subject to little or no usage restrictions, Overdraft Replacement acts as a buffer that can be used for anything from late payments, cashflow shortfalls, tax demands, utility bills, equipment purchases to staff wages. Is your business suffering from an emergency? If you discover that your business is in the middle of an emergency, the pressure that this puts you under can be immense. But rather than letting yourself get into a panic, you need to form an action plan for how you’re going to overcome it before any lasting damage is done. This is why more and more business owners are choosing to apply for Quick Business Loans in order to overcome the challenges that they’re confronted with. But with so many finance solutions on offer, how do you know which product is suitable for your business’ needs, let alone where to source an agreement from? At Rangewell, we’re an Access to Finance specialist and have mapped over 400 lenders to be able to offer you an overview of more than 23,000 business finance products. Our services are always free to use and we’ll also guide you through the application process. We’re with you every step of the way. So if you’re looking to raise capital for an emergency, apply for a Quick Business Loan today or find out more with Rangewell.
When is the best time to think about cashflow financing?
Although it can be tempting to bury your head in the sand and hope that any issues affecting your cash flow will eventually go away, how you deal with them can make all the difference to your business’ growth and sustainability. That’s why applying for Cash Flow Finance before, or at the early stages of, the crises is so crucial. Cash Flow Financing presents you with the means to access the funds necessary to continue managing your business’ finances, settle operating costs and support key growth projects. By choosing Cash Flow Financing, your business could gain access to products finance such as Invoice Finance, Merchant Cash Advance, Whole Ledger Finance, Short Term Finance, Purchase Order Finance and Contract Finance to Overdraft Replacement. So if you believe that your business could benefit from a Cash Flow Finance agreement, here’s when you should consider applying. Seasonal trade fluctuations Unexpected emergencies Supporting Investment How can Cash Flow Financing support seasonal trade fluctuations? As your business continues to operate, the amount of money that you earn month can fluctuate according to the season. Although you could generate more cash during certain months, your revenue could slow during others. As you gain experience in your chosen sector, you’ll become more attuned to the challenges that may affect your cash flow and when they are more likely to arise. Therefore, you’ll be able to work Cash Flow Financing into your business plan in order to establish a buffer which can protect your ability to manage your finances, pay staff wages, settle utility bills and meet tax demands before the crisis arrives. Worried about your business’ cash flow? Think you’ll need help managing your finances? Apply for Cash Flow Financing or learn more about how your business could benefit! Could Cash Flow Financing offer fast access to cash during emergencies? Although spotting and resolving issues that may affect your cash flow early is important, your business may fall victim to an emergency when you least expect it. But with the help of Cash Flow Finance, you could quickly gain access to the funds your business requires. Depending on which type of finance product you choose and the complexity of your request, your business could obtain an agreement in as little as 48 hours with the funds following soon after. So whether it’s damage to your premises, broken or stolen equipment or an unexpected cash demand affecting your cash flow, you’ll be able to support your finances as soon as an issue is identified, limiting the overall damage to your business. Can Cash Flow Financing help support investment projects? As well as supporting your business finances, Cash Flow Financing could also be used as a means to target the root causes of weak cash flow, including a lack of investment. This is because Cash Flow Financing contains a diverse range of business finance products, allowing you to either borrow the cash that’s required or have the funds owed from customer orders and unpaid invoices advanced into your business’ account. Therefore, this package is able to provide you with the confidence to pursue and complete a variety of crucial business projects such as refurbishments or equipment purchases to fleet expansions, ensuring that you’re to keep up with your competitors in spite of the situation. Thinking of applying for Cash Flow Financing? Making sure that your business is able to maintain a reliable cash flow each month to cover your operating costs is vital. But if your monthly earnings were to fall for any reason, the strain upon your working capital may make it harder for you to handle your finances, leading to insolvency if left unchallenged. That’s why applying for Cash Flow Financing as soon as you become aware of the issue so critical to your business’ long-term sustainability. So don’t let a temporary slow sales period threaten the welfare of your business, apply for Cash Flow Financing today, or find out more with Rangewell.
What is a Quick Business Loan?
Regardless of which sector you operate in, ensuring that your business has access to sufficient amounts of cash is crucial for maintaining high productivity, growth and sustainability. But acquiring these funds from your own finances can be difficult and risky, especially at short notice. SMEs may need emergency funding to cover business issues, unexpected bills, or even seasonal trading dips. When in need of external funds at short notice many business owners choose to apply for a Quick Business Loan. Simply put, a Quick Loan is a type of finance which is released to the borrower quickly, and there are many Quick Business Loans available for wide range of purposes, providing you know where to look. So if your business needs funding quickly and can’t afford to be left waiting around, here’s what you need to about Quick Business Loans. Why should you apply for Fast Finance? What finance solutions are on offer to your business? How can Fast Finance benefit your business? Why should I apply for Fast Finance? Cash is a vital resource for growing and sustaining your business but, at times, it can hard to come by in large amounts. If you’re in a hurry to get funding for any aspect of your business, choosing to apply for a Quick Business Loan could be the answer. Depending on the complexity of the request and which business finance product you choose, an agreement could be established in as little as 48 hours, with the funds you require following soon after. So rather than drawing funds from your own accounts, a Quick Business Loan could offer you the support your business needs without pushing your cash flow too far. Got a project that’s gone over budget? Or do you need help coping with an unexpected emergency? Apply for a Quick Business Loan or learn more about how your business could benefit! What finance products are available? Although it can be alarming to suddenly realise that your business requires additional funding, sourcing an appropriate business finance solution at short notice needn’t be a hassle. Thanks to the rising prominence of the Alternative Finance Industry, some of the many products and packages you could benefit from includes Merchant Cash Advance, Overdraft Replacement, Invoice Finance and Asset-Based Lending. Therefore, even if you need business finance at the last minute, there are still plenty of funding opportunities available that could help. What can Fast Finance be used for? What makes Fast Finance so useful in supporting and aiding your business with a wide range of financial circumstance is that it can be used for any number of purposes. So, whether you need to repair or replace vital equipment, seize upon an unexpected opportunity, replenish your inventory, pay staff or receive assistance during an unforeseen emergency, applying for a Quick Business Loan could present you with an appropriate solution. Your funding limit is usually calculated by taking into account either your business’ past income, unencumbered assets, inventory or outstanding invoices. Therefore, you can target and support any area of your business and tailor your chosen finance solution to your exact requirements. Need to provide funds for business at short notice? As fundamental as cash is for any business, sometimes you may not have the extra at your disposal to deal with an unforeseen issue or to take advantage of an unexpected opportunity. Although acquiring the funds you need may feel daunting, there are plenty of funding opportunities available that could help. The challenge for you, however, is sourcing an appropriate finance solution from a suitable lender and at a competitive rate. Luckily, we’ve already done the hard work for you. So if you’re looking to obtain more equipment, replenish your inventory or receive an urgent cash injection, apply for a Quick Business Loan today, or find out more with Rangewell.