The Polestar has been used by marine pilots for centuries to help ships’ captains navigate tricky waters; most would I think classify the current environment as tricky waters.
Having advised business owners and funders through the downturns of 1990, 2000 and 2008, as well as having had actual operational experience running businesses in those environments, the team at Polestar has considerable expertise to assist companies and their shareholders in navigating their options in these uncharted times.
We are actively monitoring a constantly changing picture and identifying the support being made available to businesses across different sectors, including the recently introduced, government backed CBILS (or, in full form, the Coronavirus Business Interruption Loan Scheme). Likely to provide only part of the potential funding solution for most businesses, we expect to see some requirement for them to work in parallel with other funding options including further government support that we consider will inevitably be required.
Whilst details on CBILS are not due out until Monday, there will be a process to go through and, depending on your business, you may have a relatively short runway to find a solution.
In the Prime Minister’s briefing yesterday, we were pleased to hear that further measures will be announced by the Chancellor in relation to employees. We are optimistic these will be more rapidly accessible, primarily because without this attribute they would likely be ineffective.
So, in the meantime, as the situation unfolds, how well prepared are you and what steps should you be taking now?
Speed is of the essence – From our experience, firms are well advised to prepare early – follow these key steps:
Engage with funders early. Particularly in the current situation, funders will be inundated with clients in difficulty. Engaging with them in a proactive way – optimally in conjunction with an independent voice, be that a non-executive director, your accountant or indeed a specialist debt advisory team (such as ourselves at Polestar) -will give them confidence that you are actively managing the situation.
Recently we advised a business that had been a customer of a large bank for many years. Combined with a strong trading record and a good level of security, this led them to consider that an extension of a facility for a temporary blip would be straightforward. However, a change of personnel within the bank on the one hand and a corresponding incorrect assumption about the level of information and explanation required on the part of the client complicated the situation, which caused considerable disruption to the business, it nearly failed.
Work with your advisers to suggest a sensible, proactive solution – the banks are busy due to the unprecedented scale of the current situation. It is imperative you provide your funders with a thoroughly thought through proposal that they can quickly consider, approve and get off their desk is likely to be to your advantage.
The amount of time taken from the decision to raise cash/update facilities to actually securing the funding is six to eight weeks in a best-case scenario. All businesses are impacted (we were discussing today the options for a debt free business with £100m turnover and a substantial seven figure cash reserve which is seeking to secure additional facilities in case they should be required). Whatever size, early action is key to keeping your options open.
In this context, you should consider carefully whether you have the resources and expertise to deal with the work involved in convincing funders, whilst at the same time making the changes that may, in some cases, be imperative for business survival. There is a lot to do, all of which is mission critical.
If you would like to assess whether we, at Polestar, could assist, we are of course delighted to discuss your individual situation. In the first instance we would ask you to complete the information form https://polestarcf.com/cbils/ and a member of the team will contact you promptly to consider your requirements.
In the meantime best of health to you, your businesses, employees and families.
Having advised business owners and funders through the downturns of 1990, 2000 and 2008, as well as having had actual operational experience running businesses in those environments, the team at Polestar has considerable expertise to assist companies and their shareholders navigate their options in these uncharted times.