It's pretty simple. Govt have pledged to pay 80% of wages. If Wetherspoons don't have the cash to do that, they ask the banks to lend them the 80%. They then repay the banks the 80% when they get it from the govt. I accept there will be a little bit of interest to pay, but 2% per annum / divided by a month or so for the sake of argument is pretty small beer.
Haven't seen many other large companies taking the same approach as Wetherspoons, so assume the rest (many of who are far less profitable), are comfortable with the govt scheme.
Missed a lot of what I posted and you are wrong in what you post above. Sadly you do not know their working capital requirements, you don't appear to understand how the scheme works either and can not update me on how to access the monies.
The banks are asking for 100% guarantees as posted before, it is that simple.
You are confusing the 80% around as well(its got nothing directly to do with wages, the loan scheme btw, so the 80% are not the same and the comparison you do above is not relevant to anything). What makes you believe it is at 2% per annum ?
Being honest I do not have the knowledge for massive sized companies any longer, as moved out of that market a number of years ago, hence why I posted generally(as mentioned twice) and my knowledge is with small to medium sized companies.
At this stage I will bow out, but would say if this goes on for 6-12 months, then the effect will be massive on life/death and businesses and would not be surprised if alot of businesses will not still be around, irrelevant of the wage scheme, just purely due to overheads and lack of trade. That is how serious this is for businesses.....
Have a read below over the loan scheme and then phone up a bank about their scheme (I know of three banks being approached within the last few days and all the banks replied the same, need security for 100%, plus arrangement fees as I posted about[this is different to interest btw] and the monies are not coming tomorrow for instance. this has been the case for small to medium sized business)):-
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The temporary Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
There are 40 accredited lenders able to offer the scheme, including all the major banks.
Eligibility
You are eligible for the scheme if:
How to access the scheme
The scheme is now open for applications. All major banks are offering this scheme.
To apply, you should talk to your bank or one of the
40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites. Please note that branches may currently be shut down to enable social distancing.
The full rules of the scheme and the list of accredited lenders are available on the
British Business Bank website.
If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
Support for larger firms through the COVID-19 Corporate Financing Facility
Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
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