Finance for all reasons

The Bank of England Base Rate is now at an alltime low of 0.1%! Going back to our last few crises: at the time of The Three Day Week in 1974, BOE Base Rate was 12.5%; during The Winter of Discontent in 1978/79 the rate was 17%; during the recessions in 1980/81 it was 14%, 13.875% during the 1991/1992 recession; during the financial crash in 2008 they were 2%.

Most lenders attach their interest rates to the BOE Base Rate (always more)

Today’s rates are sensationally low, so what better time to borrow than now? We also have the Government promising loans due to the COVID-19 outbreak which will carry zero interest rates for a year and the Government will guarantee 80% of it! So it seems that the High Street Banks might be engaging in lending money, so they should be your first port of call.

If your requirements are to serve a specific purpose there are a number of Crowdfunding sites out there but whilst their qualifying criteria aren’t quite so demanding, the interest rates can be on the high side. Funding Circle and Crowd Cube are two of the main players and they are very keen for business at present.

Both require personal guarantees . Another option is to sell some equity which staves off the prospect of interest payments but opens up the possibility of having to declare dividends (what’s known as a coupon). It also, of course, dilutes your holding in the business.

There are also the usual options of mortgaging or re-mortgaging your home, however, this process is on hold for the present because of the pandemic as surveys are not being undertaken due to the Government’s new rules. There are some Building Societies that are happy to do virtual surveys!

Equity release, either for your or your company’s use is also available (subject to the survey requirements for the present). I have seen rates of 2.58% but it’s no good for the next generation, you have to be over 55!

Surprisingly, there are companies out there that offer finance to spread personal tax payments, Corporation tax and VAT. Although, according to the Government’s latest announcement, the next quarter’s VAT can be spread over the next six months.

There are quite a few specialist Bridging Companies around that, as a rule, can bridge for 12 months, but in some cases can go to 18 months. Interest rates aren’t that cheap, but if you need to bide time, bridging loans are a good way of getting over immediate problems. You do need to give them an ‘out’ though, either with the prospect of longer term finance or perhaps the sale of an asset at a better time.

There are a plethora of companies that can offer asset finance at surprisingly good rates (the picture shows my old company’s Goss Tribune Press which cost £2.5m in 1988, and needed a lot of finance!) and of course to help the business cashflow , invoice discounting is always an option.

If I can be of any assistance to any of you, please let me know through B4.

Next week’s piece will be titled ‘It’s an ill wind that blows nobody any good’!