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SME funding: remember to think alternative finance

It is difficult to understate the size and seriousness of the challenge that small businesses are currently facing. As closure and redundancy figures underline, for most it is a battle of survival. At a time when accessing capital is critical, it is vital that owners are aware of all funding options.

According to productivity organisation Be the Business, almost 40% of small businesses have had to shut temporarily or are planning to do so shortly. Furthermore, the research states that almost a quarter of these firms have made or are planning to make redundancies.

As such, it comes as no surprise to learn that small business owners are urgently looking for advice on how to maintain cashflow, access grants and government loans and support the wellbeing of their staff.

To this end, at present, help is available in the form of small business grant funding, which is open to firms that already pay little or no business rates; the Coronavirus Business Interruption Scheme; and the statutory sick pay rebate, which will allow firms to reclaim statutory sick pay for absence because of coronavirus.

Furthermore, businesses can defer the payment of VAT until the end of June and make use of the HMRC Time to Pay service, which can provide support to firms in distress. In addition, changes have been made to insolvency rules to help business keep trading and assistance is available for businesses with the PAYE scheme through the Coronavirus Job Retention Scheme.

The government has also made help available for the self-employed through the Self-employment Income Support Scheme, which is providing grants worth 80% of an individual’s profits up to a maximum of £2,500 per month, and the deferral of self-assessment payment.

There has been criticism of the government’s emergency measures but the response to the crisis is evolving on a daily basis. For example, early criticism of the Coronavirus Business Interruption Scheme was focused primarily on eligibility criteria and the need for personal guarantees, and the government appears to be responding to this feedback. As such, issues that have been raised in connection with the help offered to self-employed people may also soon be addressed.

As well as the government’s emergency measures, small business owners should be aware of all the mainstream lending options available to them, including alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding.

Notably, as well as loans and overdrafts, the Coronavirus Business Interruption Loan Scheme is also offering access to asset finance and invoice finance, and there is good reason for this. In the wake of prolonged caution from traditional lenders, alternative finance facilities have emerged as a vital source of capital for small businesses, both for safeguarding cashflow and for essential investment. These facilities, which offer a more personalised approach to lending, are helping small businesses maintain forward momentum and grow.

The coronavirus crisis is hitting small businesses extremely hard and owners are urgently working to access capital, maintain cashflow and save their businesses. That’s why, at this time, it is imperative that they are aware of all the funding options available, including alternative finance.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.

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