Short-term finance and business support in the wake of the COVID-19 pandemic

The coronavirus, or COVID-19, has become mainstream news almost overnight and surprised many business owners by the limitations on movement and resources which were so abundant. Suddenly the reality of these changes has meant cash flow has become a bigger issue and with this, it’s useful to know there are still some short-term finance and support options available to you.

If you’re operating an e-commerce business or any business for that matter, it helps to know that you can get an influx of capital into your business to keep it afloat especially in trying times such as these.

UK government relief schemes for COVID-19

The UK government has made changes to help businesses manage their cash flow and reduce the burden for many and should help curb some of the knock-on effects.

Statutory Sick Pay relief package

New legislation from the UK government will allow small or medium-sized businesses to claim back statutory sick pay of employees who have been out of work ill due to the coronavirus up to a maximum of 2 weeks. 

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Businesses with less than 250 employees and based in the UK will be eligible.

SBRR Small business grants

If your business is currently in receipt of Small Business Rate Relief (SBRR) and pays little or no business rates, then the local authority will be in touch with such businesses to provide one-off grants of £10,000 to help support ongoing business costs.

HMRC Time To Pay Scheme

The scheme which will be reviewed on a case-by-case basis depending on you or your business’ circumstances will give some time allowances for paying taxes due back to HMRC.

Coronavirus Business Interruption Loan Scheme

This Coronavirus Business Interruption Loan Scheme was only first announced on the 11th of March and to become available from the 23rd of March next week. This scheme has been set up specifically to aid businesses that would have been interrupted during this outbreak and to support them with a loan of up to £5 million pounds. 

It is worth noting that a business is still 100% liable to repay this loan, but the government will help support eligible businesses by paying for the interest on the loan for the first 6 months.

Finance options to help you

In order to get an influx of capital to sustain your business in hard times such as these, it’s worth considering short-term finance to get you through it, but always consider how you’ll repay any of these.

Business loans

You can get business loans from £5,000 to £500,000 and the term can generally last from 3 months up to 2 years and ensure you keep operating your business in tough times. Loans can be gained from high street banks or third-party lenders.

To be eligible you’ll need to have been operating for 6 months to 1 year, turnover at least £5,000 and have all your finances in order for review.

Line of credit

This financing arrangement can allow you to borrow funds as and when required from a business lender. Each time you borrow can be treated differently and on a different schedule of repayments.

Business credit cards

Credit cards can be very useful to manage cash flow and delay the outflow of actual funds from your bank account. There are some useful credit cards that can have 60 to 90 days of interest-free credit which could be just the timeframe that you need.

Invoice factoring

If you have many unpaid accounts receivable invoices in your business, then this could become useful to take advantage of. This allows you to sell these unpaid invoices to a third-party factoring company that would buy these for a percentage of their total value and then would take responsibility for the collection of those receivables. This is extremely useful in providing more income if you’re able to utilise these.

Next steps

If you’re looking at taking on one of these options then it would help to get your accountant involved for their opinion and to support any financial decision from understanding how short-term finance can impact your business, or if you don’t have an accountant, then someone from our team would be happy to help answer any questions you may have and ensure you’re able to meet your obligations, so get in touch today.

The best time to start is now.

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