Business support measures need to be extended - AAB

Lyn Calder, managing partner of Anderson Anderson & Brown LLP (AAB), is calling for further business support. Picture: Rory Raitt

Too many businesses risk “falling through the cracks” unless further action is taken to help support them while the lockdown continues, a leading Scottish accountancy figure has warned.

Lyn Calder, managing partner of Anderson Anderson & Brown LLP (AAB), the accountancy and business advisory firm, welcomed the support announced so far by government but called on ministers to implement a series of wide-reaching measures aimed at helping businesses to survive the current disruption.

Calder, who is also the firm’s head of deals for the Central Belt, said: “The Coronavirus Business Interruption Loan Scheme (CBILS) will undoubtedly prove to be a lifeline for many businesses. However, depending on their financial status, all too many will not qualify under the current stipulations.

“For example, part of the eligibility criteria for access to CBILS requires lenders to assess whether a business is ‘viable’, which could well result in banks turning down loss-making businesses. However, this term is very much open to interpretation by the banks.

“Many early stage businesses, or those which are in the process of scaling up, were indeed ‘viable’ before the crisis but haven’t been able as yet to demonstrate a recent profitable history. While CBILS provides security in the event of default, banks won’t lend if they believe that the businesses won’t be able to make payments as they fall due.

“Other turnaround businesses will also likely be unable to access the scheme, leaving them exposed to poor trading, but potentially with a ‘viable’ business plan for growth that has been hampered due to the Covid-19 outbreak. In order to help businesses that fall into this grey area, we would like to see more detailed advice on what both the government and lenders define as a ‘viable’ business, and what other support may be available to businesses who do not have that recent profitable history.”

She added: “Additionally, there is a view that many private equity (PE) backed businesses may not be deemed appropriate for CBILS, the expectation being that the equity backer will come to their rescue. We would encourage the government to amend the eligibility criteria accordingly to plug these gaps in provision.”

A message from the Editor:

Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.

With the coronavirus lockdown having a major impact on many of our advertisers - and consequently the revenue we receive - we are more reliant than ever on you taking out a digital subscription.

Subscribe to scotsman.com and enjoy unlimited access to Scottish news and information online and on our app. With a digital subscription, you can read more than 5 articles, see fewer ads, enjoy faster load times, and get access to exclusive newsletters and content. Visit https://www.scotsman.com/subscriptions now to sign up.

Our journalism costs money and we rely on advertising, print and digital revenues to help to support them. By supporting us, we are able to support you in providing trusted, fact-checked content for this website.

Frank O'Donnell

Editorial Director