Government lends a helping hand with post-COVID finance

The world of business finance can be a minefield, particularly during the last year and a half. The government’s response to COVID-19 was to offer businesses a range of options, including grants and loans and more traditional finance methods such as crowdfunding. We caught up with two tax and finance business specialists from R&D provider Access2Funding about where the land lies when it comes to alternative business finance and what the future may hold.

Kieran Newton works as a tax specialist in the southern England and Northern Ireland regions. He has a wealth of knowledge, including the likes of corporation tax for SMEs and personal tax for high net-worth individuals, as well as corporate tax planning and restructuring. He was an accountant for six years where he built up a broad range of experience in audit.

Chartered Institute of Taxation member and fellow tax specialist Leslie Maloney works across the North West. Leslie joined Access2Funding from a role as Director at a top 20 accountancy firm. He has a chemistry degree gained from Oxford University and has worked across several roles in tax, audit, corporate finance and tax planning.

What changes can businesses expect to see with regards to finance in the coming months?

Leslie Maloney: “As we all know, because of COVID-19 many businesses needed help with finance to continue to trade during the last year. The two main schemes were the government’s Bounce Back Loans and CBILS Loans – on both of which, repayments of debt and interest will shortly start to be needing to be paid.Although the country is slowly coming out of the restrictions that have affected everyday life, it’s fair to say we aren’t out of the water yet. This could mean some businesses will need to repay these loans but could still be struggling financially.”

What options do businesses have when it comes to repaying these loans if they may be struggling?

Kieran Newton: “There is a new Recovery Loan Scheme for businesses which means business owners are eligible to re-finance existing CBILS and Bounce Back loans. However, there are no more 12-month Business Interruption Payment schemes in place from the government so that means repayments are usually immediate, unless stated otherwise by the bank.

“The main advantage of these over ‘normal’ loans is that there is a government guarantee to the bank, to encourage lending, but it’s worth remembering that the borrower is always at risk first for the full amount.”

Can you describe some alternative methods of finance to help with cashflow?

Leslie: “The R&D Tax Relief Scheme is a government initiative, created to reward and encourage UK companies to invest in innovation. Businesses could be sitting on thousands of pounds in hidden funds, simply for carrying out their day-to-day tasks! We’ve worked with clients over the past year that have discovered R&D and it’s actually helped them to keep th
doors open.”

Kieran: “This scheme is often underutilised and maybe misunderstood. To put it simply, to be eligible to claim R&D tax credits, businesses must be UK registered and liable to pay corporation tax. SMEs must have under 500 employees and either under €100m turnover or €86m on the balance sheet. R&D is assessed in Euros rather than GDP as it was written by the European Commission but is not linked to EU funding.” <

From manufacturers to food and beverage suppliers, many businesses may not realise they are eligible for R&D. To find out more about R&D tax credits from HMRC, contact hello@access2funding.co.uk or visit www.access2funding.co.uk/