DEALERS with a turnover of up to £41m must be prepared for the release of the government loans set to help businesses following the coronavirus outbreak, says national accountancy group UHY Hacker Young.
The news that £330bn of loans would be made available to businesses to assist with short- and medium-term cash-flow requirements was welcomed by many businesses.
But UHY Hacker Young says that further details released by the British Business Bank stating the eligibility criteria for an application, and the £41m turnover cap, will leave out ‘a huge proportion’ of the country’s motor retail businesses – something it calls ‘extremely concerning’.
The Retail Motor Industry Federation has been urged to take the matter up with the government and UHY Hacker Young said it was also crucial for dealers to share it with the OEMs who, it believes, are also unaware of the requirement.
Options such as Bank of England bonds for ‘larger corporates’ are available but aren’t aimed at the large-turnover-based motor retail groups because of the nature of the high-value inventory sold, said UHY Hacker Young. Any larger dealer group over the £41m threshold is urged to contact their bank manager immediately to get a better understanding of this potential option.
The accountancy group added: ‘For those businesses under the £41m threshold, it is worth preparing your business for this coming week when it is anticipated that these loans will become available through your banking partners.’
The following information that may be required/requested includes:
2019 full-year performance of the business
Management information to the end of February demonstrating that the business was viable at this point
Detailed rolling three-month cash flow forecast, rolling into a more high level six-month forecast with assumptions
Asset and liability statements
Actions taken by the business to protect itself financially against Covid-19
Actions taken by the shareholders to support the business, such as reduced earnings, drawings, cash injections
David Kendrick, partner at UHY Hacker Young, said: ‘It has been stated that there must be a viable underlying business case for this loan to be made available. Please take action now in advance so you are well positioned to move quickly when it becomes available to everyone.
‘We would also highly recommend all businesses contacting the HMRC Covid-19 helpline and requesting a VAT and PAYE time-to-pay arrangement, which is typically a minimum three-month payment holiday – this has been granted for a significant number of businesses by simply taking the time to call 0800 0159 559.’
Chancellor of the exchequer Rishi Sunak is pictured announcing the loans. Image: Matt Dunham/PA Wire