With the government loan schemes due to close at the end of November, it is important that businesses seeking to borrow funds to cover trading impacts from the pandemic get their applications submitted quickly – within the next week, ideally.

Banks are busier again as the schemes end, after a quieter period following the first wave of applications. A month to process an application is still quite tight timing for most of them.

We have detected a hardening of bank attitudes towards the retail industry in recent months as one of those hit most hard by the original and now regional lockdowns. 

Being mainly London-based, bankers are seeing the emptier streets in the capital and inferring the impact on stores.

“Very few retailers are all about the high street and most will have been able to mitigate against many of these impacts – not least through a significant increase in online sales”

With the furlough scheme being watered down, potential rises in unemployment, rents needing to be caught up and paid again, consumer confidence waning – and all this happening as the vital Golden Quarter gets under way – there are a number of reasons lenders feel they need to be cautious at present.

But, of course, very few retailers are all about the high street these days and most will have been able to mitigate against many of these impacts – not least through a significant increase in online sales. 

Annoyingly, while lenders and investors are cognisant of the structural shift to online sales when looking at store-based businesses, they still question whether this year’s online sales are sustainable or a blip. This feels like not only not getting to eat the cake, but having it taken away, too.

From our experience helping a number of retailers to get ‘Covid funding’ from banks and other lenders in recent months, the ‘accepted view’ of business planning has moved: from a spring view, when plans where expected to include a 2021 that looked much like 2020 should have; by mid-summer to trading being forecast to be back on track by mid-2021; to now probably seeing 2021 as a year of consolidation and trying to get back to a ‘normal’ trading level. 

Clearly, this will vary from business to business and those with a bias to online channels and essentials will be least affected.

But it seems likely that a number of businesses will be reappraising the funding needs that they forecast in the summer. They may need to return to the market for more funding in the near future, but probably not within the currency of the present government loan schemes unless the dates get extended. 

“Forecasting is the most difficult it has ever been. It may be worth finance departments running forecasts for 2021 based upon a high, middle and low view of trading”

It probably makes sense for many retailers to plan to raise such funding in early 2021 once the Christmas trading out-turn has been seen.

Forecasting for the coming year is the most difficult it has ever been. Even so, in November it may be worth finance departments running forecasts for 2021 based upon a high, middle and low (but not disastrous) view of trading.

That should allow the business to judge any potential funding gap. If a funding need is likely to exist, then it will probably make sense to engage with your advisers, if you use them, and potential lenders ahead of the Christmas out-turn in order to be on the front foot early in the new year.