Q Catering Roger Snelling

Source: Fairway

Q Catering MD Roger Snelling

Q Catering Supplies has become one of the first businesses to be approved for a government-backed loan to cover working capital needs during the coronavirus crisis.

Along with gut health brand Bio&Me, it is one of the lucky ones. The Coronavirus Business Interruption Loan Scheme was launched on 23 March but UK Finance figures last week revealed only 6,020 of 28,460 applications had so far been approved. 

For Q Catering, which has secured a half-million pound loan, the lifeline can’t come too soon. 

The company lost 30% of its business overnight following the announcement of school closures last month. Prime minister Boris Johnson’s announcement of lockdown days later wiped out the Sittingbourne wholesaler’s remaining £9m turnover in the hospitality industry, leaving 50 care homes as its only customers.

Owner Roger Snelling used the government’s job retention scheme to furlough 38 of his 50 employees, leaving a skeleton staff and three delivery drivers.

But the business faced £600k in bills from suppliers for stock it could not sell, while owed £1m from frontline hospitality.

“Without this loan there is no question we would have gone bust,” says Snelling. 

The scheme initially allowed small to medium-sized businesses with an annual turnover of up to £45m to access up to £5m borrowed over up to six years. It has since been extended to cover all viable firms. At the top of the scale, up to £50m is available to those with a turnover above £250m.

Snelling’s £500k is set to be released this week, repayable over 72 months. There are no set-up fees and the first 12 months of repayments are interest free under the scheme, after which he will pay 2.75% above the base interest rate.

“The scheme is very generous,” he says. “I have had to offer no personal security. The government guarantees it up to 80% and the bank guarantees the remaining 20%.”

Applying

Snelling benefitted from financial advice from Q’s buying group Fairway. “Fairway were brilliant and explained the loans were handled by the British Business Bank in a similar way to its Enterprise Finance Guarantee scheme,” he says. “I was able to put together the information my bank was likely to need once they were in a position to start offering the loans.”

He had to provide Natwest with proof the business had been profitable before the coronavirus outbreak. That included a copy of the business’s latest statutory accounts, management accounts prepared within the last 60 days and two years of integrated profit and loss accounts.

He also had to provide a projected budget for the next two years assuming there was no pandemic, along with a budget factoring in the impact of coronavirus.

“They want to see that you were a profitable business before the crisis, and would have been had the pandemic not happened,” says Snelling.

“The problem would have been if we had made a loss last year. We are likely not to have got anything if that had been the case.”

The future

The business will continue to service its 50 care homes. During lockdown it has also been providing district council hubs with essentials to make up food parcels for the vulnerable, and delivering goods on behalf of local farm stores.

Meanwhile, much of the customer base remains wiped out until lockdown ends. Nevertheless, Snelling is confident now that “with this loan, I can see myself through this crisis”.

“We will need to be running the business for two to three years in order to pay off the loan and right ourselves.

“But at least the loan is there for the losses I expect to make for the next 15 months.”