6 Funding options to consider if COVID has hit your business
The coronavirus pandemic is permeating every corner of the world and impacting all aspects of life as we know. All industries have been affected in one way or another and business owners up and down the country are facing huge challenges as they attempt to navigate these uncharted waters.
With the situation changing daily and no real idea when the pandemic will end (or how long its impacts will be felt), financial planning is undoubtedly an area requiring huge thought and careful consideration. So, what are your options?
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1. Coronavirus Business Interruption Loan Scheme
Small and medium-sized businesses in the UK are now able to apply for an interest-free loan of up to £5 million as part of the government’s promise to help businesses combat disruption caused by COVID-19.
The scheme is made up of specialist lenders and High Street Banks and will allow businesses with an annual turnover of less than £45 million to borrow for up to six years. A number of lenders have also agreed not to charge any arrangement or early repayment fees at this time.
In order to qualify for funding, you must be able to prove that your business has been trading successfully prior to the pandemic. If you think your business may benefit from the CBILS, research the full terms and check to see whether your bank is participating in the scheme before approaching a lender.
2. Alternative finance providers
As well as loans offered under the CBILS scheme, businesses can also apply for emergency business loans via alternative finance providers. Since the coronavirus outbreak, there have been certain changes seen in terms of risk assessment, creditworthiness and willingness to lend. However, the majority of business loan lenders have publicly confirmed their support to UK businesses and commitment to lending during this period.
With demand for finance increasing, it is a good idea to explore the choices available to your business as soon as you can. A positive of applying for business finance is that the process can be completed entirely online from the comfort of your own home.
Lenders recognise the urgency of the current situation and are often able to pay out in just a matter of days. You should also be prepared to sign a personal guarantee when you apply for unsecured finance. If you haven’t applied for emergency business funding before, a personal guarantee is commonly used to provide the lender with a form of security.
3. Crowdfunder campaigns
In these tough times, communities are coming together to help businesses that are battling the coronavirus. Crowdfunder has recently launched its ‘Pay It Forward’ project, a social commitment to offering 100% free fundraising opportunities to businesses in the UK. Through the Crowdfunder platform, customers can show their support by paying for goods and services in advance to help contribute to keeping businesses afloat.
You can set up your business’ campaign in just six easy steps. What’s more, in partnership with Enterprise Nation, you are eligible for free training in areas such as online sales, marketing, cash flow, and diversifying.
4. Government grants
The government has announced support through grant funding that your business may be eligible for if you have a property on which you pay rates. Sadly there have not yet been grants announced for small businesses and self-employed people who don’t own property, but the situation is changing daily as is the support that is being issued.
The Small Business Grants Fund recently increased from £3,000 to £10,000, is applicable for businesses that qualify for Small Business Rate Relief and Rural Rate Relief.
As well as this, there will also be a Retail, Hospitality and Leisure Grant Fund that will provide £25,000 grants to businesses operating in smaller premises within these industries. In order to be eligible, your business property’s rateable value must be between £15,000 and £51,000.
5. Check your bank’s support measures
The major UK commercial banks have pledged to do as much as they can to support and help businesses get through this coronavirus period. Your first port of call should be the bank your business account is set up with. Find out what they are offering as well as the practical steps they are taking to provide financial aid or assistance to members.
As an example, Natwest’s most recent update has announced help for businesses in the form of loan repayment holidays, temporary emergency business loans with no fees and immediate access to deposit balances with no penalty. You might also want to check if your bank offers invoice discounting options or invoice factoring facilities, allowing you to unlock capital tied up in long term invoices.
6. Business interruption insurance claim
If you have a business interruption insurance policy in place, make sure to get a claim in relating to loss of income ASAP. Although many BI insurance policies are worded that they will not cover COVID related losses, some do.
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COVID-19’s effects
These are incredibly tough times for businesses big and small and the true economic ramifications of this virus remain to be seen. Finance Minister Rishi Sunak has promised the UK government will do ‘whatever it takes’ whilst rolling out an initial £330 billion package of financial aid. It seems the best any of us can do at this stage is to support each other, keep calm and carry on.
Source: https://entrepreneurhandbook.co.uk/5-funding-options-to-consider-if-your-business-has-been-affected-by-covid-19/