The end of January 2021 marks the final date where applications will be accepted for Bounce Back Loan Scheme (BBLS) or Coronavirus Business Interruption Loan Scheme (CBILS) loans.  As a matter of urgency, franchisors and franchisees need to prioritise business planning and forecasting to evaluate if such financial impetus could support the franchise moving forwards.  Time is running out, so act now if you need to take advantage of these low-cost loans.

For example, consider if you have substantial bills just around the corner?  If you’ve deferred VAT payments or you have a rent holiday, these will need to be paid back shortly.  If there is not enough cash in the bank to cover these bills, these sorts of cashflow challenges can often be the cause of businesses closures.  Therefore, plan ahead and make sure the reserves are there.

Available from your own bank, Bounce Back Loans are easily accessible capital designed to keep businesses afloat through the tough times we’ve experienced lately. They provide loans from £2k up to £50K, subject to a maximum of 25% of turnover.  Bounce Back loans are 100% Government backed and effectively free for a year.  It’s straight forward to apply and could give your franchise the boost it needs to take advantage of increased trading in 2021.  Perhaps the funds could help to ramp-up your marketing to kick start the new year?  The extra budget could be targeted at getting high volumes of customers back through your doors with some special promotions designed to get ahead of your competition?

A Bounce Back loan can also be used to restructure existing finance which may include expensive overdrafts, other bank loans, Lease or Hire Purchase agreements for vehicles or equipment.  However, do make sure you are fully aware of any early repayment or settlement issues.  For example: with a lease on a vehicle, settling early may result in costly title transfer fees to ensure you can actually own the vehicle once the lease is paid off, so do read the small print or take independent advice!

For franchises that have already taken a partial Bounce Back loan then these can be re-financed to obtain the full amount available if required. 

CBILS loans are also available for organisations looking to borrow larger amounts.   The application process is necessarily more detailed and requires a cashflow forecast, proof of profit and information about how your franchise is likely to be affected post COVID, so banks know you can re-pay the funds in the future.  With the deadline for applications so close, it may be advisable to seek independent advice about submitting the information needed, to ensure your application has the most likely chance of success.  At d&t we can help with forecasting and CBILS applications.

Bounce Back and CBILS are certainly a low-cost way to re-ignite your franchise to help return to profitability.  Therefore, we are encouraging franchise companies to consider their cashflow carefully to see if additional borrowing could help.  Don’t leave it to the last minute, as if your own bank rejects your application you won’t have time to re-apply through another lender. 

At d&t, our friendly, experienced team are always happy to advise and help navigate the best way forward for individual franchise owners and franchisors.  Our team add value not just numbers and are trusted to provide the most appropriate advice dependent on individual circumstances.