Are you facing a liquidity shortage?
These are the financing possibilities

When it comes to financing possibilities, a great deal of attention is currently being paid to the SME credit guarantee scheme (Borgstelling voor het Midden- en KleinBedrijf, BMKB), which the government has expanded. However, there are other possibilities. This article sets out all the financing possibilities that are available for dealing with a liquidity shortage.

Government measures

SME credit guarantee scheme

The SME credit guarantee scheme is designed to make it easier for small and medium-sized businesses to borrow money from banks. Under the scheme, the government provides a partial guarantee for the loan or credit that is taken out. This means that banks are exposed to less risk and that you can borrow more than you could have done on the basis of security given by you. In addition, you can borrow money at a lower interest rate. The SME credit guarantee scheme has been relaxed and expanded in response to the coronavirus crisis. The scheme essentially works as follows:

• The SME credit guarantee scheme can be used to finance 75% of a bridging loan (was 50%).
• The personal guarantee to be provided amounts to 10% (was 25%).
• The scheme can be used for a new loan, credit or current account overdraft.
• The way in which the loan/credit is to be repaid is decided in consultation with the bank.
• No check is carried out to establish whether there is a shortage of collateral.

Applications for the SME credit guarantee scheme (BMKB) can only be made through accredited lenders. These include the major banks ABN AMRO, ING and Rabobank in any event.

Qredits

Qredits, which provides microcredit on behalf of the government, finances and coaches a large number of small start-ups that often have difficulty obtaining finance from banks. These businesses are active in sectors including hospitality, retail, personal care, construction and business services. Qredits is implementing a temporary emergency measure, under which small businesses that are affected by the coronavirus crisis are allowed to defer repayments for a period of six months, during which the interest rate will be automatically reduced to 2%. The government is allocating up to € 6 million to support Qredits through this measure.

Business loan guarantee scheme (GO)

Businesses that experience difficulty obtaining bank loans and bank guarantees have been able to make use of the GO business loan guarantee scheme since 2009. Through the GO scheme, the government helps small, medium-sized and large businesses by providing a 50% guarantee for bank loans and bank guarantees. Loans of between € 1.5 million and € 150 million per business will be guaranteed. This represents a substantial increase in the maximum facility that can be provided under the GO scheme to individual businesses (from € 50 million to € 150 million). In addition, the budget for guarantees provided under the GO scheme has been increased from € 400 million to € 1.5 billion.

In this way, the government has committed to providing all guarantees required so that businesses with good future prospects will still be able to obtain adequate financing. The aforementioned ceilings are the same as those that applied during the financial crisis and create enhanced financing possibilities for businesses. These enhancements will come into effect within a week.

SME credit guarantee scheme for small and medium-sized farms (BL)

The agricultural and horticultural sector is facing a decline in national and international demand for its products due to the coronavirus crisis. As a result, prices have come under pressure and in some cases it has proved impossible to sell produce. Owing to the nature of the sector, finding other sales channels or markets, or adjust production levels to reflect demand, is not simple. Moreover, the people in those sectors have to keep on working so that produce can be harvested even if it will not be sold. As a consequence, agricultural and horticultural businesses may face liquidity problems. Their liquidity problems can be eased by means of the temporarily enhanced guarantee for working capital under the SME credit guarantee scheme for small and medium-sized farms (BL). The adjusted SME credit guarantee scheme for small and medium-sized farms (BL) will apply with retroactive effect from 18 March 2020.

What can you do yourself?

Adjust payment terms for interest payments and repayment instalments

If you have a bank loan, find out whether you can suspend the repayment of your loan for the time being. This will increase the term of your loan. Another possibility is to adjust the payment terms for interest payments, for example so that you pay interest annually rather than once a month. This will enable you to release cash immediately. Talk to your bank about this to find out what is possible in your situation.

Sale-and-leaseback

You no doubt have movable assets that can be converted into cash. One option is to sell them, but you can also consider leasing them back. It is likely that this will only be possible if the moveable assets are not too old.

Increasing available credit

Increasing your credit limit will immediately raise your available funds. A credit limit offers the advantage of no repayments. Reach agreement with the bank on the timing of the evaluation of the credit limit, which will be followed by a review to determine whether the level of credit will remain unchanged or, alternatively, will be reduced in a controlled manner. Under the new SME credit guarantee scheme (BMKB), there are more possibilities available for banks to grant current account credit for up to two years.

Applying for a loan

With a loan, the money arrives in your account immediately. As the bank may demand monthly repayments, you should apply for a bridging loan. This is a loan that is intended to tide you over a specific period. Once again, you need to agree with the bank that a review will be carried out at a certain time to determine whether this bridging loan will be continued or, alternatively, will be repaid in a controlled manner. Under the new SME credit guarantee scheme (BMKB), there are more possibilities available for banks to grant bridging loans for up to two years.

Alternative financing sources and possibilities

Besides the aforementioned possibilities and the major schemes that the government has introduced or expanded, there are many other alternative financing sources and possibilities.

• Stand-by credit: a form of current account credit that does not require you to change bank, in which lenders can immediately provide a buffer that is based on historical performance. If you do not need to make use of this buffer, the costs remain low. And if you do need to make use of the buffer, you will have immediate access to this credit. Possibilities based on historical performance are available for businesses that perform (or performed) well, but your situation may change radically in the space of a few months.
• Mortgage loan with repayment and interest payment at the end of the loan’s term: a mortgage or second mortgage on the property for six months, in which the repayment period does not start until the end of the six-month period.
• Financing on the basis of equipment that already exists.
• Refinancing with lower monthly charges and repayments.
• Factoring, if the business already has an overdraft facility.

Would you like to find out quickly which financing sources and possibilities you can use? If so, we can arrange your financing application for you, using a link from your accounting records to Loanstreet, a platform for financiers and lenders. Complete the form below to find out, without obligation, whether you qualify for financing.

Knowledge dossier on our website

Do you want to know what possibilities are available to you for gearing your business processes to the measures taken so far in connection with coronavirus, or what you can do to help your business stay afloat? We have created a special page on our website, where our coronavirus team of specialists will share their knowledge with you in the coming months. Keep a close eye on that page so that you can make the right choices for your organisation. If you have specific questions about the impact on your organisation, please get in touch with your contact person at Moore DRV or complete the contact form below.