• Loans: 50% of manufacturers are seeking £643.5m in CBILS funding before end of April.
  • Cash: Two-thirds report shrinking orders with less than £50k cash before they run out of money.
  • Revenues: 64% have halved order expectations for 2020 but are optimistic that the business environment will normalise by the end of the year.

8th April 2020, London: UK manufacturers are facing a precarious future according to insights1 from fintech business lender MarketFinance. Over two thirds (68%) reported their order books have halved in the last 30 days. To compound matters, the majority (67%) have less than £50,000 cash and, without any support, will run out of money before the end of the month.

Loans

Over half (51%) of manufacturers are interested in accessing funding through the Coronavirus Business Interruption Loan Scheme (CBILS, which offers up to £5m interest free for the first year, over 6 years) to shore up their business for the medium to long term. The majority (33%) of manufacturers are seeking an average loan of £62,500, equivalent to £417m for the sector2. Just 4% were seeking a £10,000 loan, one in ten (11%) need £17,500 and a further 3% need £300,000. If they are unsuccessful in securing a business loan, most reported they would turn to invoice finance (finance on outstanding invoice payments owed to them).

Cash flow

With March revenues halved and near term prospects looking uncertain, most manufacturers (64%) have revised down their order books for 2020 by 40-50%. They are seeking short term solutions to remedy finance concerns. They ranked a larger overdraft facilty as first preference before seeking a business credit card and, in third place, using invoice finance as a means of injecting working capital into the business.

Anil Stocker, CEO at MarketFinance, commented: “Manufacturers are in urgent need of support. All the industry indicators show orders are down and unlikely to recover much this year. They have been hit hard by the COVID-19 outbreak. A number of firms have had to shut their doors and some that remain open are pivoting to make products that support the national effort to contain the spread of the virus. It’s imperative that we back these businesses.”

Advice

Most (36%) manufacturers are turning to their accountants for advice on what to do next before consulting their friends and family (19%). One in five (18%) are seeking advice from their bank manager. Business owners feel their accountants are the most accessible given the remote working environment.

Emma Loisel, founder and chair of Volcano Coffee Works commented: “We have a roastery in Brixton, London and our revenue dropped 91% in March. The lockdown has meant our hotel, cafe, restaurant and office customers are closed. We are pivoting to selling online and sales have gone up 7-fold but it’s nowhere near the revenue we need to sustain the business alone. We urgently need the CBILS funding at this challenging time and to give our wholesale customers time to start trading again. We’ve not needed a loan before but hope that Lloyds Bank will look after us. We’ve been delighted with invoice finance from MarketFinance which has helped us manage cash flow.”

Anil Stocker added: “Manufacturers are turning to their accoutants as their trusted advisors for support during this period of uncertainty. These accountants have the tools and know-how to support them in revising their cash flow forecasts, applying for loans and making contingency plans. It’s important for everyone – bank managers, accountants, financial advisors – to come together to support manufacturers. Business advisors will need to bring all their energy, skills and experience to savemanufacturers across the country”.