With relatively little of the new funding yet reaching its intended recipients, and both the UK and the Scottish Governments trying to respond to pleas from all parts of the community with new announcements, the funding landscape is changing daily.
The following is a random selection of comments about funding issues affecting young companies in Scotland.
It is impossible to summarise the various interventions here in a way that is accurate, up to date, and helpful, but there are various websites which aim to do exactly this, for example:
One of the main ways for young companies in Scotland to keep track of what is happening is the series of webinars from the Scottish Business Resilience Centre. Beside covering funding issues including the way in which VCs see the impact on their investing, the series also includes discussions of legal and HR issues, communications, and more:
The Corporate Finance Network (www.thecfn.org.uk) states that most banks are trying to offer overdrafts, invoice discounting or loans through their normal lending products first, and only if that is not possible are they turning to Coronavirus Business Interruption Loan Schemes (CBILS). The website gives a useful summary of all the lenders across the UK.
The CFN has also made its own proposals to the Chancellor with alternative suggestions for supporting SMEs, objecting to the idea that loans are appropriate for the support of many types of company. Kirsty McGregor, chairman of The Corporate Finance Network, says “Whilst most of the recent changes to the CBILS are on the whole welcome and will make facilities easier to access for many SMEs, I am still concerned that the Government is encouraging, in fact expecting, SME business owners to load their business with debt.
“The emphasis should always be on saving jobs, so if business owners don’t want to continue to trade, they should be able to exit, whilst looking after the employees at all times. And the other smaller businesses who do wish to continue in business should be supported, without the need to take on the stress of more debt.”
We have included on the opposite page the text of the Save our Start-ups campaign. Not everyone agrees with this approach: Robin Klein, partner at London-based VC firm LocalGlobe, says “Don’t bail out the start-ups”
The Sifted website (“In-depth reporting on the European startup ecosystem, including company updates, funding rounds, venture capital deals, founder stories and how-tos”) also has a summary of government backed support measures across Europe for start-ups affected by coronavirus, including grants, loans and other measures.
Companies that are manufacturing Personal Protective Equipment (PPE), ramping up food production to support demand, or changing their business strategy to incorporate e-commerce sales and delivery options, may be able to secure loans of between £25k and £100k from Business Loans Scotland (www.bls.scot), which can be used towards working capital, purchasing machinery or equipment or recruiting new employees to assist the business during these challenging times. BLS can also give advice to businesses capable of switching production to manufacture PPE or other essential equipment.
P2P alternative finance business Lending Crowd (lendingcrowd.com) has offered borrowers a three-month repayment holiday. By enabling borrowers to have a brief break from their loan repayments, the firm’s aim is to help them emerge from the Covid-19 outbreak in as strong a financial position as possible.
Par Equity (parequity.com) has launched a fully online application for its Par EIS Fund, which it says is always open for investment. Its next two investments will be made at the end of April, and the firm goes on to say “Deal flow remains strong and is increasing. With uncertainty comes opportunity, and we’ll continue to identify and invest in some of the most promising tech companies in Scotland, Northern England and Northern Ireland.”
And could the technology being developed by fintech companies make it quicker for people and companies to access the funding now available? James Herbert, CEO of London-based fintech Hastee (www.hastee.com) says “People need access to their earnings, benefits and relief payments now, to pay for urgent necessities and to help avoid getting into unmanageable debt.
“Whether they be citizens requiring access to Universal Credit, Statutory Sick Pay, Furlough payments, or other forms of government emergency relief, the waiting times for such benefits are and will continue to cause hardship for those whose regular income has been disrupted. Many simply do not have the savings to wait.
“There is technology that sits within UK fintech scene that could speed up this process, taking the wait for workers down from weeks and months to potentially days and hours. All that is needed is the data – who needs to receive what money, when, how much and by whom. It’s that simple.”
Hastee itself is removing all fees to critical services, including the NHS, for the next six months at least, and to all clients new and old for the next three months.
And lastly, for a thorough explanation of what the COVID-19 virus is and how its spreads, see the TEDMED Q&A article, 100 Questions of Peter Piot, LSHTM Director of the London School of Hygiene and Tropical Medicine. It’s not going to go away!