Business

Challenge facing small businesses with loan scheme

BY Susana Lorena   /  7 April 2020

Two weeks ago I closed the shutters on my lingerie and swimwear shop in Notting Hill, West London, as the coronavirus lockdown began.

I opened the shop three years ago and it has been a roller-coaster ride. It’s been a tough time for many retailers as business has migrated online but we’re a specialist fashion store – one of the retail sectors that has still done well. Women still want to come to a physical store to buy lingerie. Buying bras can be tricky because of the way women’s shapes change at different times in their lives so many want advice and personal service to help them.

Over the past three years we have weathered the damaging impact on business and footfall caused by missed Brexit deadlines and two general elections. Even bra sales suffer during election periods. Uncertainty makes everyone less keen to spend and after the December election we saw business surge ahead in the run up to Christmas. We had a great January sale. In February, seasonally our weakest month, we doubled the budget and despite the March shutdown, we still managed to end the financial year with sales up.

Now the shop is shut.

We’re lucky we have some online business through our website, which we can keep going in line with the government guidelines. So I now offer online appointments and fittings over Facetime or Zoom and we can have the products delivered. It will keep a little revenue coming in but it won’t cover the rent and like many other small businesses we are trying to work out how to get through the coming months.

The Chancellor’s package of measures to help small businesses like us – the business interruption loans and grants – all sounded wonderful and the changes he announced on Friday were welcome. But announcing policies like this is easy. The real challenge is making it happen so that the thousands of small businesses do actually get the finance they need.

Our experience – and the tiny number of loans awarded so far bears this out – is that the money is just not getting through.

This is what happened to us. We applied to our bank two weeks ago for a loan under the Government’s new Coronavirus Business Interruption Loan Scheme (CBILS) to help tide us over.

We have a good relationship with the bank. They’ve always been very helpful and we’ve never borrowed money from the bank before. But the whole CBILS process has been chaotic – and I suspect our experience is typical.

First our bank told us to go to the British Business Bank website, click on the bank’s logo on the site and then fill in a form expressing interest in a CBILS loan. Our bank relationship manager asked if we would send him a screen shot of the form so he could see what it looked like.

A week later nothing had happened.

We got back in touch and our relationship manager then told us we needed to fill in a different online form applying for one of the bank’s overdraft or business loans. It said the bank would consider us for one of their loans and if we didn’t meet their criteria, we would then be considered for a CBILS loan if we were eligible. We were told we would be contacted again, normally within three days.

After a week nothing had happened.

I am sure it is incredibly difficult for the Government and the banks to get this kind of scheme up and running quickly and effectively when the main priority is keeping the public safe and healthy. The logistics of channelling money to thousands of companies are hugely complicated and the Chancellor’s changes to the government loan scheme to make it easier for banks to offer the loans is welcome. But it’s not clear how much it will speed things up and time is not on the side of many small businesses.

There are other forms of help for SMEs like special government grants and the furlough scheme to cover 80% of staff wages but none of this money is available immediately.

Like any sensible business we plan for the possibility of downturns and recessions. But you cannot plan for a situation where your sales suddenly stop. And for a clothes retailer like us, this couldn’t have come at a worst moment of the year. We have been building up stock for the peak selling season in spring and summer. That means a lot of working capital is tied up in stock.

We are in a better position than many. But unless the Government takes rapid action to cut through the bureaucracy and get the money in the hands of small businesses, many small companies are going to run out of cash very quickly.

As for bras, you may not think they are an essential item, but for many women a well-fitting bra is essential to both comfort and health. And it’s a sure way of making you feel good and keeping morale up during the shutdown.

Susana Lorena is managing director of Maison SL, a specialist multi-brand lingerie and swimwear store. www.maisonsl.com


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