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New sources of SME funding for Lockdown 3.0

Written by Andrea Reynolds on Friday, 12 February 2021. Posted in Funding, Finance

Unfortunately, the latest restrictions have delayed the return to business as usual for many SMEs.

New sources of SME funding for Lockdown 3.0

In December’s article, I started by saying how many business owners would be glad to see the back of 2020, before explaining the rollout of the vaccine was a cause for optimism as I looked ahead to 2021. Of course, that was before the new variants of the coronavirus emerged and another wave of infections sent the country back into lockdown, or Lockdown 3.0 as some have labelled it. 

Unfortunately, the latest restrictions have delayed the return to business as usual for many SMEs. Among the hardest hit are those in retail, leisure and hospitality. The Chancellor Rishi Sunak recognised these sectors needed further support to survive another lockdown, so at the start of the new year he announced a one-off grant worth up to £9,000 which businesses can apply for based on the size of their premises. Unlike the loan schemes launched during the first lockdown, discussed later in this article, these grants don’t have to be paid back.  

The Chancellor also extended the furlough scheme again, this time until the end of April, and you can still apply for business rate relief, based on the rateable value of your property. Mr Sunak will review all the support measures and decide whether to extend them in the budget at the start of March. 

Many limited company directors who pay themselves in dividends felt let down by the government in previous lockdowns because they were only allowed to claim for their PAYE salary through the furlough scheme. The Chancellor has been under pressure from the Treasury Select Committee and lobbying groups to fix this oversight. While Mr Sunak hasn’t committed to any specific measures yet, I expect him to make an announcement sooner rather than later. 

Of course, the other sources of funding I mentioned in December’s article remain available, whether to help your business to take advantage of opportunities presented by the latest lockdown, or to offset its impact. 

You can apply for asset finance if you need to invest in a new piece of equipment, machinery or vehicles, while asset refinance allows you to unlock cash from your current assets. 

A lot of businesses experience late payments during a slowdown, and to make matters worse on this occasion, Brexit is causing disruption to supply chains. If your company has suffered, you might want to consider applying for invoice finance which lets you borrow against your accounts receivable.   

If you’re looking to purchase or remortage property or land for commercial use, you might also want to consider a commercial mortgage so you can repurpose your business property to meet your current needs. 

The shift to ecommerce during the pandemic has led to the development of new financial products, thanks to the additional metrics available from online payment providers such as PayPal and Stripe. For instance, lenders can now use data from successful Google ads campaigns or pre-Covid transactions on credit card terminals (known as revenue-based lending) to assess applications. 

Finally, the Chancellor has extended the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) until the end of March. Even if you don’t need the money at the moment, securing the extra funds could make sense. You can keep it in reserve and repay it before interest becomes due after 12 months.

About the Author

Andrea Reynolds

Andrea Reynolds

With 15 years’ experience in corporate financing, largely focused on matching businesses with funding and investment opportunities, Andrea launched Swoop in 2018 to help SMEs start up, scale up and finance their new ventures.

Arguably the UK’s number one expert in business funding, it’s not hard to see why she is affectionately known to colleagues and industry peers as the ‘Martin Lewis of business finance’.

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