Thoughts from my kitchen table in this period of isolation. The economic impact of coronavirus - which i'll talk about today - is huge but fortunately the job protection scheme that has been put in by Rishi Sunak where 80% of the salaries are paid for, it's going to actually have a big impact on what could've been a disastrous and employment position. Capital Economics thinks it will be 6% unemployed compared with 4% today rather than 8 or 9% without intervention. So that's all good.
Butthe other very important matter was the business interruption loan scheme which is for SMEs with turnover less than £45 million - and that's a lot of companies - this is to essentially help companies with declining cash flow and with a declining sales.
But the way that scheme is being administered is through the banks. Now, the lens through which the banks will view an application, it's going to be the same as if you were applying for a normal loan. It is quite a bureaucratic process, so it's not a simple matter of pinging an email to your bank manager and saying "I want this loan". There are processes to go through and that is going to take time.
Banks aren't over populated with administrators. So, this load on the banks it's going to be very significant. So, the question is whether they are capable of rising to the challenge and dealing with these requests coming in. Now, in the wording it's says that those companies that are seeing the ailing cash flow or the fall off of revenue can apply.
This is going to be a lengthy process so in order to protect your business you're going to have to start early and you're going to have to convince in the plan that you know that your sales are going to be down. Because you need to apply now before it's actually happened, because by the time it has happened you could well be out of business.
Getting the plan right and not taking shortcuts is really important. So, whatever you need to do in your business planning needs to be done in the same rigorous way as you'd submit to the banks.
I have my doubts whether the banks are able to rise to the challenge and handle the amount of administration that will be required in this - and let's hope they do. But that's a big risk, so if you're running a business and you think you will need it, the message is "get going now" and plan and prove that you're going to be losing the cash flow and you're going to be losing the sales in the future. Don’t wait till you've already had it, as you may not be around to collect the money.