Chartered accountants UHY Hacker Young have prepared a guide to help car dealers prepare applications for Government loans set to help businesses following the COVID-19 coronavirus outbreak.
UHY said that it is essential for dealers to be prepared for the release of the Government loans, which were announced earlier this week and account for around £330 billion of the support package outlined by Chancellor Rishi Sunak, to assist with short- and medium-term cash flow requirements.
But the automotive accountancy specialist has also expressed concern at the lack of provision for larger car retail groups after the Government set a maximum company turnover of £41 million among its criteria for eligibility.
While there are support options such of Bank of England Bonds for “larger corporates” these are not in reality aimed at the large turnover based motor retail groups, due to the nature of the high value inventory sold, it said.
For car retail businesses that are eligible for a Government loan, UHY anticipates that the application process will be very similar to the EFG loans introduced in 2009 and released through the banking network.
To prepare your business for next week when it is anticipated that these loans will become available UHY has suggested that car retail businesses start gathering the following evidence/documentation to assist them in making a speedy loan claim:
- 2019 full year performance of the business
- MI to the end of February demonstrating that the business was viable at this point
- Detailed rolling three-month cash flow forecast, rolling into a more high level six month forecast with assumptions
- Asset and liability statements
- Bank statements
- Actions taken by the business to protect themselves financially against COVID-19
- Actions taken by the shareholders to support the business such as reduced earnings, drawings, cash injections
- Business plans for the coming weeks for differing scenarios
- Understanding the likely level of funding required and a high-level plan as to how this loan would be repaid in the future
David Kendrick, partner at UHY Hacker Young, said: “It has been stated that there must be a viable underlying business case for this loan to be made available. Please take action now in advance so you are well positioned to move quickly when it becomes available to everyone.”
“We would also highly recommend all businesses contacting the HMRC COVID-19 helpline and requesting a VAT and PAYE time to pay arrangement which is typically a minimum 3 month payment holiday – this has been granted for a significant number of businesses by simply taking the time to call 0800 0159 559.”
A number of businesses in the automotive retail sector have already taken their own steps to assist retailers who are beginning to feel the impact of the coronavirus outbreak.
Earlier this week, Peter Vardy Group chief executive, Peter Vardy offered a free three-month trial of his SilverBullet online car sales ecommerce platform to assist businesses that currently have no means to facilitate “contactless” online sales.
And yesterday (March 19) Auto Trader announced that it would be waiving its advertising fees for April and deferring payment of its March charges in a bid to assist retailers.
Auto Trader issued a statement via the London Stock Exchange to reveal that the move would likely result in a £6 million to £7m loss next month.