Questions and answers
Swoop Webinar 28th April 2020:
How to fund your business through Covid
1. What funds/loans are there for a brand new tech startup with little or no trading history?
This is an area where the government is still lacking in the understanding in terms of the tech community not being serviced by the offerings that are out there. They are listening to industry feedback and this is one area that we have been shouting very loudly about, as part of a consortium that is speaking to government. We hope that message rings through and they come out with other schemes.
You should be considering start-up loans and R&D tax credits. You can also shorten your financial year-end to get a corporation tax return earlier and be able to get an R&D claim earlier.
2. I am receiving mixed messages (from brokers and banks) as to whether the CBILS facilities can be used for acquisitions. Please can you clarify?
Yes. Our interpretation is that you are eligible if you are looking for the loan to support investment, increase working capital, fund business growth, or acquisition. It is worth keeping in mind, however, that lenders have their own eligibility criteria.
3. What is the fintech business Swoop is partnered with to help with cash flow forecast?
4. To be eligible for a startup loan, does my company need to be tech focused?
No, it can be any business, it is not specific to Tech-focused businesses. Start-up loans are a government-backed scheme to enable entrepreneurs to find the initial capital to get your idea off ground.
5. Will there be a webinar for the Republic of Ireland?
Yes. We will be announcing the details for our ROI webinar shortly and will keep you updated. We’ll be covering all schemes available in Ireland.
6. All of this analysis by lenders, seems to be the main reason why getting money out the door is so slow. I have a friend in a bank who says he has 30 mins to assess a loan. Surely all of this information request gets in the way of distributing the money? If the government guarantees the loans, surely there is no risk to the banks?
Yes, it sometimes takes up to three hours to assess a loan, as this is a human led assessment. The application Swoop delivers to lenders is a summary report with all of the key metrics and analysis done for them. Hence why we are speeding up this process with them. The time it would have taken to assess a loan can be done in a matter of minutes, therefore making a decision instantly.
This week we have new lenders entering the market with faster lending technology based purely on auto decision. All we do is share key data points that those lenders need and we can get instant decisions. We are expecting to see a huge rise in successful loan applications from this week on.
Government guaranteeing the 100% is also a measure that they are reacting to because things have been so slow. For those sub £50,000 loans, we will start to see a speeding up in the process (even from traditional lenders) as in those instances they are covered. There’s 100% guarantee from the government so in terms of their risk assessment it should be a lower benchmark than we have been seeing.
7. I am banking with Tide and they are not approved. If the goal is to distribute as quickly as possible they should be approved?
They may be in the process of getting accreditation which can sometimes be a very slow process. Yesterday we saw the announcement on the 100% personal guarantee. That was part of the big policy change that the government needed to get comfortable with.
Now that they have, we know of other funds and other non-traditional banks who have put in applications to be accredited.Some hadn’t heard from British Business Bank for three or four weeks. Now they have heard that the delay has been because of these decisions, so we expect the accreditation process to speed up.
My expectations are that we may see Tide in one of those accreditations. RBS and NatWest will accept applications from businesses who’s banks do not offer CBILS so there are other options available.
If you are banking with Tide I would imagine a speedy and smooth digital journey is important to you, so I would say the alternative lenders would be a better bet for you.
8. We recently registered as a UK company and subsequently got approval for UK EIS. We are an early stage company of Irish origin with Enterprise Ireland funding. The only relevant scheme for us seems to be the Future Fund scheme. We currently have a UK VC interested in a pre seed round. Should I suggest that they apply for this or is there something I can do to confirm eligibility?
Yes, it sounds like you are eligible. Given that you have had EI funding I am assuming that was £250,000, so you have probably passed the mark of raising £250,000 in the previous 5 years. If you have a UK investor who is interested in investing, then yes, as long as you have a UK registered entity you would be able to apply for the scheme. Please contact our team so we can go through the details of that with you.
9. What are the eligibility criteria for the Bounce Back loan?
As soon as more details become available we will have it live on our website. We will also keep our community updated. You can sign up to our newsletter if you would like to receive these updates.
10. Are banks and lenders taking debentures on CBILS facilities and are there any issues with this?
Some are looking to take debentures so are of course looking at what other charges may be on businesses, what other lenders you have in place, and is there any headroom there. So, it’s not across the board. If you want to contact our team we’ll give you some more insight in this.
11. Are start-up loans still available
Yes, they are and are also very active. We would be happy to fast track through the start-up process for that.
12. How do we apply for Innovate UK loans or grants?
The details are not available yet as soon as they come available we are happy to let you know. From what we’re hearing so far, Innovate UK will be contacting its customers offering the service but we will update you as soon as it’s live.
13. Banks are fully covered for loans up to £50,000. The government is guaranteeing 80% over that, with the other 20% being covered by a PG. What is the risk to lenders?
Their risk is whether the personal guarantee can be upheld. Will this person have net assets sufficient to be able to repay the level of exposure they have? In that instance they will be looking for a statement of assets & liabilities etc. The risk appetite of all of these lenders is not high. They did not choose to be lending at vast rates to businesses. This has come upon them quickly. There are new measures coming in everyday that are improving situations for business owners.
14. A client has received an offer of £60,000 below their request. Can they make an additional application to another lender or do they just get one shot at CBILS?
Yes, if it’s a good offer at a good interest rate from the lender, then we could go for an additional one via the alternative lenders. As long as the affordability is there and we can prove that you can service that from the previous year’s EBITDA, then yes, we could absolutely put that before other lenders. My questions are: Is it reaching those max limits? Was that worth 25% of turnover or x2 the average annual wage bill? If you can answer those questions positively and there is still headroom and affordability, we would be happy to submit that and at the very least get an answer for your client.
If you have any queries please call our Swoop coronavirus funding hotline on 0203 868 0364 (8am – 6pm, 7 days a week).
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