Survey: Liquidity and cashflow are key concerns for one third of businesses in a post-Covid economy

The announcement of more government-backed loans on the way is welcome. A recent survey by Chartered Accountants Ireland indicates liquidity and cashflow are key concerns for a third of businesses. There is a low bar for businesses to be considered for these loans. They have to have been negatively affected by Covid 19 by at least 15% reduction in turnover. AIB, Bank of Ireland and Ulster Bank have committed to the €2 billion scheme of which the government will be guaranteeing 80%.

Many business owners we speak with have not qualified for bank loans, yet liquidity and cash flow support is badly needed. Sometimes an urgent requirement has emerged. Funds are needed in a quick turnaround that’s more suited to a Fintech than a bank. Here are some of the primary alternative solutions that might work in these situations:

Peer to peer loans

Currently the lenders are increasing amounts that can be funded. In the early days of Covid 19 some of their funders had taken a pause which meant the P2P lenders were more reliant on their crowdfunders. The good news is that funders are returning and with increased confidence. You can expect to get an unsecured loan up to €300,000 for a term of up to 3 years. There is a return of a 5 year loan capped at €100,000.

Secured Loans

During Covid 19 businesses that have assets such as machines and vehicles or land & buildings could refinance them to release working capital. The credit teams have an easier time in approving a loan when they have collateral. Refinancing land & buildings can have some set fees that make it attractive for seeking hundreds of thousands of Euro but not for lower amounts. Whereas using machines & vehicles is less complicated and can be suited to tens of thousands of Euro.

Invoice Finance

As business in Ireland opens up more credit teams are more open to financing invoices owed by companies in your book of debtors. There are one-off, ad hoc and ongoing finance facilities available, with up to 95% of the debtor value funded. If there are any debtors that are considered too high-risk currently, they can be reassessed for funding at a later stage as Covid 19 stresses ease.

Trade Finance

During Covid 19 certain businesses involved in trade have picked up such as PPE and eCommerce businesses. Trade finance helps them finance their purchase orders with someone elses money, thereby keeping vital working capital in their business. If you are ordering product from China for example, often you need to pay 50% immediately and 50% on delivery. Your money can be tied up for weeks and trade finance can help with this.

Merchant Cash Advance

Businesses such as hotels, restaurants and retailers who take a lot of payments by card can get a fast loan based on the turnover on their merchant statements. It’s reasonable to expect, if you’re doing €100,000 turnover by card a month you might be able to get a €100,000 loan. The credit teams can easily top up a facility again if needs be. Merchant Cash Advance also works for eCommerce businesses using data from Stripe, PayPal, Shopify etc. There is now a lender on the market who finances B2C stock and digital advertising. They plug in to your analytics and make a loan offer using this data. They have been known to ramp up funding quickly based on performance.

There are many other loan options on the market and we’re happy to help get your finance quotes so you can get the best deal. Call us 7 days on 01 55 636 55 or use the web chat box in the bottom right corner of this page.

Business Loans Covid 19


Quotes:

“The survey, conducted by Chartered Accountants Ireland among almost 2,000 members on the island of Ireland, also shows that liquidity and cashflow are key concerns for one third of businesses in a post-Covid economy.”

https://www.rte.ie/news/business/2020/0717/1153861-chartered-accountants-ireland/

“AIB, Bank of Ireland and Ulster Bank have committed to offering loans to small businesses under a €2 billion State guarantee scheme at costs that will be “significantly below” market rates, said Tánaiste Leo Varadkar.”

https://www.irishtimes.com/business/economy/state-guaranteed-sme-loans-to-be-below-market-rates-t%C3%A1naiste-says-1.4306439

BusinessLoans.ie - Year In Review

It’s been just over a year since www.BusinessLoans.ie got started and I’m pleased to say it’s been a great year. I had started forming the idea for the business when I worked at a peer-to-peer lender in Dublin. They offer unsecured finance and the loans are filled with funds from ordinary investors who choose to chip in on business loans. They are helping the Irish economy while at the same time getting a far better return than leaving their funds stagnate in a deposit account with the bank. So while I was working there I realised that the rejection rate was quite high. There were many other non-bank lenders on the market but few options to make multiple loan applications from the one place, hence I decided to set up a solution to this problem.

To give you an idea of the kinds of businesses our team have helped read about some of the finance deals we organised in 2019:

Scaffolding Company - Financed for €150k

We had a sole trader scaffolding company that was having trouble getting approved for a loan from their bank. There had been some history from during the recession years in Ireland that affected so many people in the construction industry, however the banks are less understanding than the non-bank lenders that these people were mostly victims of circumstance. This lack of access to finance was strangling these companies ability to grow; and business was booming and this client was turning away business. We found our client approval within 24 hours of receiving a few easy-to-get documents.

Cattle Exporter - Financed for €120k

If a complicated overseas transaction hits a bump it can hurt your cash flow. This is what happened when a sudden change in the value of a currency affected a big cattle deal, leaving hundreds of cattle in a yard needing to be fed until the next deal could be lined up. This can take months so we organised some much-needed working capital to keep the business running smoothly after this business hiccup.

Beautician - Financed for €4k then €5k then €8k

We deal with smaller loans for young businesses too. We spoke with a beautician whose business was around 9 months old. Her turnover was modest but regular but the bank wasn’t helping. Fortunately she had a business that used a card machine and based on her volume of monthly transactions we were able to organise a merchant cash advance. Then she came back a couple of times during the year to top up with more loans as she grew her business.

Property Developer - Financed for €100k

A property developer had the perfect deal. Everything was pre-sold to the local council for social housing in a very low risk situation, however the banks were not on board. What was most perplexing for the client was that they had spoken with many non-bank property lenders who are supposed to be more flexible but were not of much use to them. The site to be built was rural, near a little village in Cavan and this location was deemed unattractive to all the lenders they had engaged with. They didn’t need a lot to get going. Just €100k to finalise a contract and commence works and they would receive some staged payments to get their work done. Time was also of the essence. www.BusinessLoans.ie was able to assist and they got on with their construction.

Importer / Exporter - Financed for €500k

An opportunity came knocking for an importer of steel. The Turkish Lira crisis meant there was a lot of cheap steel to be imported. However, to protect our market the EU decided VAT had to be paid upfront and this was an issue for this business. The good news for them was they had a strong asset list; over the previous years they invested in machinery and it was mostly paid off. A loan by way or refinance was possible. We raised a €350k secured loan from this as well as a €150k loan unsecured and they we’re able to make hay while the sun was shining for their steel deals.

We hope you got a taste for the kind of situations we can help get loan quotes for. We will keep on trying and won’t stop until we have got you the best deal available; or at worst exhausted all avenues. Thanks to all our clients for an amazing 2019 and we look forward to growing with you in 2020. Don’t forget we’re still manning the web chat box you see in the bottom right of this screen and on our site over the holidays. If you’re making your new year business resolutions and that involves finance, we’re with you all the way.

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Getting a Business Loan When The Bank is Not Helping

Most business owners I speak with have already tried their bank. Sometimes they have simply been declined because their business hit some difficulties and the accounts are not too strong or they are near the limit on their overdraft facility. Other times the bank is taking too long and they need a quicker turnaround than the situation they find themselves in.

So what can you do? Here are a couple of examples of recent clients that can shed some light on potential solutions.

Machinery Refinance

John is a farmer whose business suffered badly with the heatwave in 2018. This affected his accounts and cash flow and he was struggling to get a loan approved. He identified an opportunity to buy an excellent breed of cattle from Denmark at a knock down price. A heatwave there affected the price of feed badly resulting in a sell off and this bargain appearing. He needed to act quickly.

John wanted a €50,000 business loan. Over the years he had bought a lot of machinery. Some were fully paid off and others were still on finance but were mostly paid off. We discussed potential options and settled on a secured business loan as the way forward. He put together a list of vehicles and machines stating the manufacturers, models and years of manufacture as well as amounts of finance outstanding. The partner credit team assessed this and was able to propose a loan facility over 5 years secured on the assets. John was then able to draw down the loan and get on with his business initiative.

Card Machine Finance

Mary is a small hotel owner in the west of Ireland. It’s a family owned business that’s performing well after a quiet number of years. The hotel was badly in need of a renovation and this would in turn drive more profitability however, the bank had said they were at the limit of finance that could be extended to them and no unsecured business loan could be made to facilitate the renovation.

Mary required a €100,000 business loan to upgrade and refresh the hotel rooms. As a busy hotel it had a large volume of card transactions. Mary was able to provide 12 months merchant statements showing average turnover of over €100,000 a month. We decided that a merchant cash advance application was the best way forward to get the funds quickly and the renovation done in time for the busy season. Mary was able to get a loan facility that would be paid back over a year. It had a flexible repayment that suited her seasonal business. It works by taking a small daily percentage of the card machine income. That means when it’s busy you pay back more but when it’s a quiet time of year you pay back less. The percentage is set with the aim of repayment within the year. Mary was happy with this and was able to draw down the funds within days.

So that outlines a couple of past clients we could help. There are many other solutions that can fit your needs right now. We are here for you 7 days a week to talk finance. Call us on 015563655 now?



90% of Irish Business Owners Can Save On Their Card Machine Charges With This New Service

Let’s see if we can save you money on something your business may already be using. That's your card machine and the charges you pay every month on your merchant services statement. We have partnered with Ireland's only independent merchant services consultants & brokers who have over 30 years experience in the banking and financial services area. They can identify savings for over 90% of clients they help and uniquely often without the need for a provider switch as it may be possible to simply amend your existing solution.

Key benefits in getting your review

  • Businesses in Ireland are paying large fees annually to acquiring banks for the ability to accept cards. Many of these fees lack transparency and are loaded with unexplained and hidden charges. Our partner works on behalf of your business not the bank. You can have proposals professionally evaluated from any provider in the market

  • You will find out if you have been overcharged and may be entitled to a refund or compensation from your provider

  • You will get a detailed independent audit to identify all areas where savings or security improvements can me made

  • You can have savings identified without always having to switch provider. Often savings can be secured from your existing acquiring bank

  • If you are currently waiting days for settlements you will no longer have to. You will have access to leading Irish, European & international acquiring banks with next day full gross settlement at the lowest possible cost

  • If you accept payments over the telephone "customer not present" transactions can be charged back many months after processing. Find out how to build layers of security in to your payment process and dramatically reduce your risk

  • PSD2 Regulations come in to force in this September and you will receive independent advice procedural or structural changes that may be necessary for your existing payment solution

Testimonial

"They professionally assisted our busy bar business to significantly reduce the cost of accepting debit / credit cards and ensured that funds were in our account on the very next day. We would strongly recommend that every business should have an audit carried out as the level of detail and expertise is sure to be an eye opener. Our experience is that you have all to gain and nothing to lose as they worked on our behalf in assessing and negotiating with a number of different banks. Highly recommended."
Grainger's Pebble Beach, Dublin 3

"They prepared a detailed audit for our business, identifying a number of serious issues even apart from transaction pricing. They assisted us in fixing all problems and sound fraud prevention advice has been invaluable to our company."
Merlin Properties, Dublin & London.

Next Step

So what are you waiting for? To get going we’ll need some merchant statements from you for our partner to conduct your review. If you're interested in learning more send us a message now or call us on 015563655