Accessing finance for small business recovery from April 2021

It’s no surprise that the need for small business borrowing in 2020 was significantly higher than in previous years. The government-backed Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) have now (as of March 31) closed, resulting in a lot of uncertainty for some business owners.

Finding the right solution It’s important that small businesses have access to finance options that fit their needs. A large percentage of small firms will need immediate short-term or mid-term finance in 2021, with the expectation that they might need finance again at some stage in the future. It often comes down to the risk appetite of the lender and sector restrictions, so getting the right guidance can be invaluable. Although CBILS and BBLS have closed, new financial support schemes were announced during the 2021 Budget:

  • A recovery loan scheme that replaces bounce back loans and CBILS where the government will guarantee up to 80% of loans from £25,000 to £10m. Applications for this loan will open on 6 April.

  • A £5bn fund for restart grants of up to £6,000 per premises for non-essential retailers and up to £18,000 per premises for hospitality and leisure businesses. To apply for the restart grant scheme you must visit your local council’s website. You can find the website for your local council here.

  • £700m for arts, culture and sporting venues to support reopening.

  • Additional support for the self-employed. Claim a grant through the Self-Employment Income Support Scheme.

Getting an advance on your unpaid invoices: Think hard about your requirements. Do you need working capital or a short-term loan?

Speak to your adviser and make sure you answer these questions upfront. The real benefit of finance solutions for unpaid invoices (often referred to as invoice finance) is that you usually manage to raise more funds than a typical loan.

It’s often dependent on the lender’s risk appetite. It might be a “No” from one lender, it could be a “Yes” from another. It’s worth exploring multiple options.

It typically used to be 30-90 days to get traditional finance for unpaid invoices, but now with services such as NatWest’s Rapid Cash it can be as quick as 48 hours thanks to integrations with accounting software, such as Xero.

Alternative lenders like iwoca and MarketInvoice also integrate directly with your Xero account, meaning it can just take a few clicks to submit the required data.

Resources to help navigate uncertainty 2020 was anything but predictable for businesses and there’s still a tough road ahead. However, ensuring that businesses have the right information and tools to plan for the future will make a world of difference.

Some of this information has been taken directly from Gov.uk and is subject to change.