Since Covid, small businesses in the UK have faced new challenges; including difficulty in attracting customers, re-establishing cash flow, managing staff absence and rising borrowing costs. But with proper planning and accessing appropriate funding it remains possible to make your business thrive again.
Policy makers play an essential role in supporting the business community. Through its Covid-19 schemes – such as Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS), which have assisted over 1.3 million businesses by offering loans up to £45m – policymakers can play an instrumental role in helping this vital sector thrive.
Now that the majority of loan schemes have closed to new applicants, it is crucial that the industry provides maximum flexibility to allow small and medium sized enterprises (SMEs) to manage their debt without recourse to government guaranteed facilities. This can be accomplished through providing non-scheme loans as well as forbearance measures for those needing support.
The British Business Bank recently unveiled the Recover and Recover Loan Scheme (RRL), which can provide up to £40m in loans to small and mid-sized businesses to help them overcome any financial challenges they are experiencing. This facility complements their BBLS and CBILS lending facilities and will offer up to an 80% loan guarantee; this cover interest payments and lender-levied fees; however clients remain responsible for any debt incurred.
Other lenders also provide short-term loan solutions, including the Working Capital Loan Scheme (WCLS), launched in March 2021 to meet the temporary needof UK small and medium-sized businesses by offering up to £1 million for working capital requirements. WLCS loans come with terms ranging from 1-5 years and are accessible both through major banks as well as smaller specialist providers.
SME businesses need access to sufficient funds in order to effectively navigate through the impact of the pandemic. Working with lenders who understand both their current environment and have experience providing loans during periods of economic distress will allow SMEs access to funds they need for debt
Andrew Moss, managing director of Horizon Retail Marketing Solutions – which manufactures packaging and promotional material for retailers – laments rising interest rates as “very difficult for small businesses like ours.” Extra loan repayments have added extra operating expenses on top of energy bills, mortgage interest, statutory sick pay for his staff as well as mortgage repayment. With forecasters projecting that UK base rate may continue to increase to five percent, any measures introduced to assist consumers cope with increasing rates must reflect their increased burden on businesses.