CREDIT CRUNCH - HELP FOR YOUR BUSINESS

Business Voice WM has produced the following information to help your business during this credit crunch.

Further help can also be found on www.supportwm.co.uk or you can call the Business Links Credit Crunch Hotline on 0845 002 0900

I am having problems getting normal business finance to tie me over

There is the Enterprise Finance Guarantee run by the Government's Department for Business. This is a guarantee facility for small businesses intended primarily to improve the availability of working capital through term loans and the consolidation of overdrafts. It will also support lending for business growth and development in cases where a sound proposition may otherwise be declined due to a lack of security.

The guarantee will cover the following types of lending:

• new term loans (with terms of between one and ten years)
• existing lending where lenders might not otherwise refinance the debt
• conversion of part or all of an existing utilised overdraft into a term loan in order to release capacity in the overdraft to meet working capital requirements (conditional on the lender being prepared to continue to provide an overdraft and the serviceability of both the term loan and the overdraft)

The guarantee will fund:

• working capital
• investment by businesses seeking to grow or develop

In addition to regular capital and interest payments to your lender, and any arrangement fee which they may charge, a premium is payable to the Department for Business

The premium is equivalent to two per cent per annum on the outstanding balance of the loan, assessed and collected quarterly in advance throughout the life of the loan.

A discount of 25 per cent will be applied to all premiums due and successfully collected during 2009.

Delivery of the Enterprise Finance Guarantee, including the decision on whether or not it is appropriate to use it in connection with any specific lending transaction, is fully delegated to the participating lenders. There is no automatic entitlement to receive a guaranteed loan and nor is there any pre-qualification process for it.

The following main lenders will lend to eligible businesses under Enterprise Finance Guarantee:

• HSBC
• Barclays
• Clydesdale/Yorkshire Bank
• HBOS
• Lloyds TSB
• RBS/Natwest

It is likely that a significant number of existing smaller SFLG lenders will become lenders under Enterprise Finance Guarantee in due course.

Up to £1.3 billion of new bank lending will be guaranteed by the Government.

• Eligible businesses are able to borrow between £1,000 and £1,000,000 when this would not otherwise have been possible.

Small businesses iwith an annual turnover of up to £25 million are eligible.

Loans for most businesses purposes to businesses in most sectors are eligible. The principal exclusions relate to businesses in the agriculture, coal, and steel sectors, and to the financing of individual export orders. Your lender will advise if any of these restrictions affect your business when they consider your loan application.

Businesses will need to provide all the information normally required by a lender in connection with a loan application, which will generally involve competing their application form and providing supporting information, typically including your:

• current business plan, including details of the purpose for which the loan is required and details of other investment in and financial commitments of the business
• financial projections
• historic trading figures
• statutory and management accounts
• information on any other publicly funded support received by your business within the past three years

The Government has launched a £75 million Capital for Enterprise Fund with £50 million of Government funding which will allow companies to fund business development by selling debt in exchange for an equity stake in their business. The fund will provide equity and quasi-equity of between £250,000 and £2million for companies of up to £50m turnover who have viable business models and growth potential in need of long term capital.

The government has established a multi-million pound equity finance scheme, Enterprise Capital Funds (ECFs), to enable funding, of up to £2 million, for businesses that require investment that falls within the 'equity gap' – more than business angels can supply and less than venture capitalists would consider.

If your business finance problems is having a direct impact on your personal finances you can call the National Debt Line on 0808 808 4000

Advantage Business Angels (loanss of £25K and upwards)  - 0121 456 7942

Beer and Partners (loans of £25K and upwards) - 01902 892555

Minerva Business Angel Network (loans of £25K and upwards) - 024 7632 3123

Central England Business Angels (loans of £25K and upwards - 07973 321237

Advantage Creative Fund (loans up to £250K for creative firms only) - 01543 473 035

Mercia Technology Seed Fund (loans of up to £750K for technological firms - 0121 236 8855

Advantage Early Growth Fund (Loans bedtween £20K and £100K that are matched by private

sector - 07710 131 458

Advantage Growth Fund (loans up to £250K) - 0121 710 1990

Advantage Enterprise and Innovation Fund - (loans between £250K and £1m matched by private sector - 0121 616 0180

Investbx - Regional stock exchange that raises up to £2m per firm - 0121 233 4903

 Community Development Finance Institutions (loans up to £50K) - www.fair-finance.net or you can call 0845 250 0525 

Proof of Concept - Grants of up to £30K representing 75% of external project costs - www.advantageconcepts.co.uk

Grants for Research and Development (from £5K to £500K) - 0121 503 3230

Rural Development Programme for England - for rural firms - 07824 542559

Grant for Business Investment (from£10K upwards to support capital expenditure) - 0121 503 3271

To find out more about the Enterprise Finance Guarantee, Enterprise Capital Funds and Capital for Enterprise Fund please contact the Department for Business - please call the Business Link Credit Crunch Hotline on 0845 002 0900

The bank is not listening to my needs - what can I do?

If you feel the bank is not listening to your needs you can ask the Financial Intermediary Service to help you. This service is free as it is funded by the Government and it is part of Business Links. You can call them on 0845 002 0900 and they can ensure they can talk to the bank on your behalf to see what arrangements can be put in place to help your business.

I can't get export credit insurance for my business - what can I do?

ECGD, the Government's export credit agency, have launched a letter of credit guarantee scheme to assist UK exporters by boosting the availability of short-term export finance.

In the current economic climate, UK exporters are looking for secure forms of payment from their overseas buyers, particularly those in emerging economies. One of the most secure payment mechanisms for foreign trade transactions is a confirmed letter of credit. Under this a bank in the UK guarantees payment to its exporting customer, provided documents stipulated in the letter of credit issued by the buyer's overseas bank are presented to it. In this way, the UK exporter is able to eliminate the risk of non-payment by its buyer.  

By sharing with banks the credit risks associated with confirmed letters of credit, ECGD aims to increase the amount of short-term export finance which the banking sector can make available to UK exporters. This is particularly important at a time when the overall risk appetite of the trade market has been reduced due to the recent difficulties in the financial sector.

To start with, five banks – Barclays, RBS, HSBC, Lloyds TSB and Standard Chartered – are supporting the scheme and will be making arrangements in the coming weeks to allow exporters to participate. It will cover 282 overseas banks in 36 export markets. More banks and export markets are expected to be added to the scheme.

ECGD will share up to 90% of the risk on individual letters of credit.

To start with the scheme will cover:

Algeria

Azerbaijan

Bahrain

Bangladesh

Brazil

China

Croatia

Egypt

Ghana

India

Indonesia

Jordan

Kazakhstan

Kenya

Korea

Kuwait

Libya

Mauritius

Mexico

Morocco

Nigeria

Oman

Pakistan

Panama

Peru

Philippines

Qatar

Russia

Saudi Arabia

Sri Lanka

Taiwan

Thailand

Tunisia

Turkey

UAE

Vietnam

The scheme will run until 31 March 2011. It will not cover exports to the EU or to Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland or the United States. To do so would require EU State Aids approval from the European Commission. Letters of credit are not commonly used in these markets.

For more details of the new scheme contact Steve Roberts-Mee, ECGD's Head of Communications, on 020 7512 7319 or 07990 887852 or call Business Links Credit Crunch Hotline on 0845 002 0900

I am in the construction industy - I need help to get funding to keep going

I took a loan out on my house for the business and I am worried that I might now lose my home - what should I do?

Mortgage Rescue Scheme is designed to help you stop your home being repossessed if this would mean that you became  homeless and entitled to support from your local council. If you are likely to be able to get your situation  back on track, then a housing association may buy a share in your home. This would cut your monthly repayments. If you are in more serious difficulties, a housing association may buy your homes and you will then be able to stay there as a tenant. To find out more please call your local council's housing department or contact the Citizens Advice Bureau on www.citizensadvice.org.uk

There are so many issues that are coming up now that I need to speak to someone?

The publicly funded business support network - Business Links - have a Credit Crunch Hotline - 0845 002 0900

My customers are paying me later and later - what can I do?

The law exists for you to deal with late payment. Details can be found on www.businesslink.gov.uk/bdotg/action/layer?topicId=1074002362&r.s=sl

If I could get the energy bill down a bit, then that would help

Good advice on cutting down on the energy bill can be found on www.businesslink.gov.uk/cutfuelbills

The orders are drying up - should I be looking for overseas work?

The public body, UK Trade and Investment, can provide support here - further details are on www.uktradeinvest.gov.uk

I am going to have to think about whether I can keep the staff on

ACAS - the Advisory, Conciliation and Arbitration Service - can help here. Their free and confidential advice can help. They are on 08457 47 47 47 from 8am to 6pm Monday to Friday and also on www.acas.org.uk

In addition, Jobcentre Plus may be able to help you and your business consider options  - free of charge. Depending on where your business is based one of the following offices could be contacted:

Shropshire, Herefordshire, Worcestershire - 01432 363672 or 01562 623661

Birmingham, Solihull - 0121 255 8351

Sandwell, Dudley, Wolverhampton, Walsall - 01902 435163

Coventry, Warwickshire - 02476 232598

Staffordshire - 01782 382164

I am confused about employment law and what I legally have to do to employ people

To save money and time in knowing about employment law and get free advice on getting contracts of employment together you can go - free of charge - to www.businesslink.gov.uk/employingpeople

Not only are my overheads tight - but I am worried about staff absences because of swine flu - what should I do?

The National Pandemic Flu Service is now live. The dedicated website and call centres will take the pressure off GP surgeries and hospital A&E departments.

Online and/or by phone, your employees can quickly check their symptoms, receive a diagnosis and get access to medicines. Anyone who is likely to have swine flu and needs antivirals will receive an authorisation number. A 'flu friend' - a friend or relative who does not have swine flu - can use this number to pick up the employee's medicines from the nearest collection point. Identification will be needed for the person who is ill and for their flu friend.

You can call the National Pandemic Flu Service on Tel 0800 1 513 100 or on minicom/textline 0800 1 513 200.

The more your employees know about how to prevent infection, the more resilient your business will be

It's important that you and your employees continue to do everything you can to stop swine flu from spreading.

Key ways to prevent the spread of swine flu are:

• always carry tissues
• use clean tissues to cover your mouth and nose when you sneeze
• bin the tissues after one use
• wash your hands with soap and hot water or a sanitizer gel often

Or in short: "Catch it, bin it, kill it."

Email your employees the NHS leaflet on swine flu

The official NHS leaflet explains swine flu, how it differs from other flu viruses, how to prevent transmission of swine flu and how to access treatment.

We recommend that you email this leaflet to your employees, and suggest that they forward it to friends and family.

Download the NHS leaflet on swine flu from the Directgov website (PDF, 119K) - Opens in a new window. You can also access the leaflet on swine flu in alternative languages and formats on the Directgov website - Opens in a new window.

Employees who are pregnant

If an employee is pregnant, she can access the latest advice about pregnancy and swine flu on the NHS Choices website - Opens in a new window. She can also access pregnancy and swine flu advice on the Department of Health website - Opens in a new window.

Is there are changes I can do to help me out with the tax bill?

You need to speak to an accountant.

This includes all business taxes - not just VAT. You will need to call your local HMRC office to discuss this with them.

Things you can consider with your accountant include:

Entrepreneurs' relief reduces an individual's tax liability to only 10% on the first £1 million of gains arising from the sale of shares in a trading company. The individual must be employed or an officer of the company and have had a minimum 5% shareholding during the year prior to sale. If you put in place a suitable share ownership structure now, which may involve the use of trusts in order to avoid outright ownership passing, you will ensure three-year ownership requirement is met by the time you come to sell.

In recent years you may have diverted surplus cash from the business into investment properties. Now is a good time to consider moving the property into personal ownership or a personal pension scheme. Remember to consider whether or not the property is providing security for company borrowings. Importantly, a reorganisation now to separate the property from the business in preparation for sale, may pass HMRC's scrutiny more easily than if made just before the businesses have put their sale or acquisition plans on ice and are focusing on reducing costs, maintaining cash flow and minimising liabilities.

A company may carry on several different businesses, not all of which would be attractive to a potential purchaser. Add to this the complication that shareholders may have different aspirations for the several separate businesses. Now is the time to consider demergers or other forms of reconstruction to package the business into subsidiary companies or to allow disparate groups of shareholders to go forward independently. You may be able to agree advantageously low values of the business with HMRC.

Often there is an ongoing trade requirement for HMRC approval of reconstructions. It is much easier to satisfy this requirement if the reconstruction is part only of a planning exercise for the eventuality of a sale.

Where costs are under pressure, you may be looking for alternative ways of paying employees rather than making redundancies. Options to consider are flexible or short time working, additional holidays, additional benefits and also share-ownership schemes. Advantage can be taken to negotiate low values for shares over which options are granted under the attractive Enterprise Management Incentive Scheme.

Always get professional advice before taking action with tax.

I am worried the business bank account is not secure because of this credit crunch

Partnerships and sole traders can claim up to £50,000 when savings are in failed financial institutions. If the loss exceeds £50K there are ways to address this and more information can be found from the Financial Services Authority on www.fsa.gov.uk

Laying Off Staff

No business wants to lay off staff if it can help it and that is why businesses can get free advice from ACAS - the Advisory, Conciliation and Arbitration Service - to help businesses think through their options. Their free and confidential advice can help. They are on 08457 47 47 47 from 8am to 6pm Monday to Friday and also on www.acas.org.uk

On top of this, Business in the Community, also has some good pointers as to what a business should think about before staff are laid off.

Business in the Community is acutely aware of the challenges and constraints that its members are currently facing in light of the economic climate, and we are committed to supporting its members through such challenging times. We recognise that some organisations will be forced to restructure and downsize in the near future in order to remain operational. We believe that socially responsible downsizing is not an oxymoron - in today's current economic climate, it is becoming a reality. Being socially responsible is often more than just engaging in an activity - in many instances, it is about how an organisation engages in an activity. Business in the Community believes that while not being a desirable option, downsizing can be done in a socially responsible way by putting the points below into action.

Consider all potential options

Research has demonstrated that downsizing does not always result in the desired savings, as organisations underestimate the costs of losing talent, damage to employee trust and motivation, increased stress and damaged brand image. With this in mind, it makes sense to consider alternatives to downsizing, and recent months have seen organisations adopting an innovative approach to cutting their costs:

• Permanent TSB has offered staff up to €35,000 to take a 2-3 year career break (www.reutors.com)
• As opposed to forcing redundancies, JCB entered into negotiations with its staff, which culminated in employees accepting a pay cut of £50 per week in the hope of keeping their jobs
• Michelin have asked their employees to take extended leave over Christmas to prevent a tyre stockpile situation escalating, thereby reducing costs.

Planning and implementing downsizing

If you have little other option other than to downsize, be sure to plan the process carefully. Research has suggested that almost half the effort to implement downsizing should be done before downsizing is announced.

• From the very outset, make sure you are fully aware of your legal requirements. Begin by visiting sites such as www.businesslink.gov.ukor www.berr.gov.uk for free advice on employment law. For more specific advice on the necessary steps to redundancy in Northern Ireland, visit: https://redundancyni.gov.uk/.

• Once this is done, set about giving careful thought to exactly what you hope to achieve by downsizing, and give due consideration to how you are going to provide for both departing and remaining employees. If appropriate, use Business in the Community's '8 principles of CSR to guide you': http://www.bitc.org.uk/news_media/corporate.html

• Consider all stakeholders affected by downsizing. Clearly, this will involve employees, but may also include other local organisations, politicians, government agencies and the media. For example:
  • Indesit Company offered incentives to local organisations to employ the workers that it was forced to make redundant. The amount paid was relative to the skills of the individual.

• Consider how you can best cater for the needs of employees that are both leaving and remaining in the organisation. Use the expertise of other organisations, such as EGSA to help employees increase their employability. To get a greater insight into how other organisations can assist and support employees during downsizing, click on www.egsa.com or www.acas.org.uk. For example:
  • In 2007, Seagate took the decision to close its Limavady branch. The site closed in September 2008. The company used the intervening time to put in place a range of support for its employees. With a strong focus on developing skills, Seagate provided its employees with independent information, advice and guidance for learning and work. Organisations, such as EGSA provided information days, in depth career guidance and tailored factsheets on training pathways in related and/or relevant career areas.

  • In 2007 Sanmina SCI were employing 250 staff (200 blue collar, mostly male). Many had few or no qualifications, and some had worked at the company for over 20 years. The company wanted the employees to feel they had taken action to answer their -what next?- questions. EGSA were brought in to challenge preconceptions held by some workers about their ability to engage in learning again and to support them in seeking new career directions.

  • Link with organisations such as Business in the Community to give employees the opportunity to gain valuable experience in other local community and voluntary organisations in a volunteering capacity.

The outstanding characteristic of responsible companies are that they treat employees affected by downsizing with respect and dignity, that their policies are perceived to be fair to surviving as well as departing employees, that they over communicate throughout the implementation process, that there is continuous top management presence and support for the effort, and that the time span for realizing reductions is sufficiently long to minimize layoffs or render them unnecessary.

Maintaining a sense of trust