How can you keep your business finances healthy through Lockdown 3.0?

Andrea Reynolds – Swoop CEO

This article is By Andrea Reynolds, CEO and Founder at Swoop Funding

In my last article, I wrote about some of the trends in SME financing I expected to see in 2021, hopeful that the roll-out of coronavirus vaccines would lead to an easing of lockdown restrictions and a gradual return to business as usual.

Little did I know the latest wave of infections would bring about what many are referring to as Lockdown 3.0 and prompt the government to launch support measures for sectors that were previously neglected.

Just after the turn of the new year, the Chancellor Rishi Sunak announced a round of one-off grants to help the sectors that were hardest hit by the latest restrictions. Retail, hospitality and leisure businesses can apply for up to £9,000 based on the size of their premises, which they won’t have to pay back.

Of course, they can also take advantage of business rates relief and the furlough scheme which now runs until the end of April. Mr Sunak said he’d review these measures and decide whether to extend them in the Budget at the start of March.

What support is available for limited company directors?

Meanwhile, limited company directors who pay themselves primarily in dividends are waiting to hear what kind of support the government will offer after many were left out during previous lockdowns. They could apply for the furlough scheme but only claim for the salary received as PAYE.

While the Chancellor hasn’t committed to any measures yet, I expect an announcement soon as he’s under increasing pressure to address the issue from the Treasury Select Committee and various lobbying groups.

SMEs that don’t fall into either of these categories can still access the sources of funding we highlighted in December’s article to help them get through the latest lockdown. If you need to invest in a new piece of equipment, machinery or vehicles for your business, you might want to consider asset finance rather than a traditional bank loan. You could also use asset refinance to release funds from assets you already own.

Is your SME struggling with late payments, a common problem during an economic slowdown or due to disruptions to supply chains caused by Brexit? If so, invoice finance could offer a lifeline, as it allows you to borrow against outstanding invoices.

Commercial Mortgages

Over the last few months, we’ve seen an increase in demand for commercial mortgages as business owners look to purchase or remortgage property or land for commercial use. Finding the ideal commercial mortgage could benefit you in a number of ways, from saving you money on rent to enabling you to repurpose your business property for more effective use.

Don’t forget to explore the new range of products that have become available following the increased use of payment providers like PayPal and Stripe as shoppers were forced online during the pandemic. Lenders can now use alternative criteria when assessing an application, such as performance metrics from a recent Google Ads campaign.

Finally, SMEs can take advantage of the favourable terms offered by the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) until the end of March. The Chancellor hasn’t mentioned an extension to either scheme yet so if you haven’t already applied, don’t wait too much longer.

Even if you don’t think you need the extra funds at present, it may still be worth applying as you don’t pay interest on your loan for the first year. Having the money in reserve might come in useful in the coming weeks and months.

If you need help securing funding for your SME, get in touch with Swoop today.