Coronavirus Crisis – Forbearance Part 2
Twelve weeks ago the coronavirus and subsequent lockdown rules led a period of forbearance in the business world. We commented on this temporary state of affairs in our article of early May which can be found here https://www.poppletonandappleby.co.uk/coronavirus-crisis-bit-business-bubble/
Since then the lockdown measures are beginning to ease and we are seeing the first signs of that forbearance starting to erode. As the business world attempts to move into “the next phase” and the lifting of restrictions allows certain sectors to increase activity, we are seeing attitudes start to harden which could threaten recovery efforts.
In the last week we have been consulted by a number of businesses, some of whom are reporting increased pressure from suppliers for accounts to be settled before new supplies are made.
A few weeks ago we reported on Landlords and finance companies offering payment holidays and two of the clients have reported this is no longer the case. One is facing demands from the landlord to pay the next rent in full and on time at the end of June and the other made a request of their finance company for an additional one month payment holiday. Both requests were declined and the clients were told to ‘go and borrow the money and use the Bounce Back Loan Scheme which is what it is for’ so that they could pay the accounts in full and on time. Both clients are reluctant to borrow when the future is so uncertain.
There will be further challenges as businesses are weaned off the CJRS as furlough support is reduced and then withdrawn. Certain businesses who have relied on this may not yet be ready to get back to work and with little or indeed no income, the financial lifebelt thrown to business by the Government is being taken back at a time when many businesses will still be in stormy economic waters.
We are now entering a critical stage for business. As discussed previously, as we exit the restrictions that have been in place for almost three months, businesses will become more and more exposed as the forbearance starts to evaporate.
The Team at Poppleton and Appleby are continuing to provide help and support to clients throughout this crisis and we are seeing a significant increase in the number of worried business owners seeking advice on options. Please see our website for contact details if you need support in advising your own clients https://www.poppletonandappleby.co.uk/