Coronavirus: What financial support is available to your small business?

The coronavirus pandemic has hit companies of all kinds, and many - from pubs and restaurants to small manufacturers  - have been forced to shut their doors.

This is unavoidable, even if your sector is not one of those closed down by the government. Customers are not coming in and many staff are opting to stay at home to avoid the potential of infection. Materials and stock may be hard to source with many suppliers already in lockdown.

But whether or not you are actively trading, you will need an income to keep your business viable. There will still be some bills that need to be paid – and as a small business, you are unlikely to have the cash reserves you need to handle them yourself.

The position is changing on an almost daily basis, but at Rangewell we have drawn up a quick guide to grants and government support that are currently available, and the funding options that may still be available from the commercial finance market.

Small business? Local grant funding could be available

If your business currently qualifies for Small Business Rate Relief (SBRR), a grant of £10,000 will be paid automatically by the local council.

This is should be automatic. You don’t even have to apply for this grant. Your local authority is scheduled to contact you in the early part of April with the details of what you are entitled to and payment should be made shortly after.

If you have any questions about whether you will qualify for this grant, you should contact your local authority. You should find details of their preparations for SBRR on their website, and there should be someone at the council who can help you over the phone.

Retailer? You could be in line for a larger grant

Retail businesses are particularly vulnerable in the current crisis.

Retail businesses are not simply shops, but restaurants, cafés, drinking establishments, cinemas and live music venues and others where business depends on the presence of customers.

The lockdown means that those customers are simply not coming in – and will be unlikely to return for months.

This would usually spell disaster for the businesses that are now standing empty up and down the country – many of which were already suffering as customers deserted the high street for the internet for many types of shopping.

If your retail business has a rateable value between £15,000 and £51,000, the local council grant could rise to £25,000.

As with the small business grant, no action is required. Your local authority should be in touch in the next few weeks with further details.

The Coronavirus Business Interruption Loan Scheme  - CBILS

If for any reason you don’t qualify for the grant or believe it may not be enough, you may be eligible for the Coronavirus Business Interruption Loan Scheme (CBILS) and may be able to borrow up to £5m through the Scheme.

This provides financial support to smaller businesses that are losing revenue and seeing cashflow disrupted as a result of the COVID-19 outbreak. It provides loans rather than grants – but these loans will be interest-free for 12 months, with the government promising to underwrite 80% of the loan should a business fail following the COVID-19 pandemic.

Lenders have been instructed to judge applications by the business’s previous performance and future viability. They are advised to look at current issues  ‘sympathetically’ which means that if your business was successful before the crisis, they should provide the funding you need.

The scheme is a part of a wider package of government support for UK businesses and employees. You can apply to lenders directly – but at Rangewell we are ready to help provide the help you need to secure the funding you need.

Coronavirus Job Retention Scheme

Your wage bill is one of the largest costs you are likely to face. Laying off staff is unfair and will bring negative publicity but, fortunately, you may be able to take advantage of the Coronavirus Job Retention Scheme to protect the jobs of workers who would otherwise be laid off during the crisis. With the scheme, the government will pay 80% of these wages. This will initially be for three months, although extending the scheme has not been ruled out.

Further details are to be released, although, for your staff to qualify, you must classify them as a ‘furloughed worker’ and notify HMRC through a portal, which is currently under development.

You will be able to apply for the funds as soon as the service is ready and backdate your claim to the beginning of March - it is up to you whether you pay the remaining 20% of your worker’s wages.

Borrowing the money you need

The government’s funding schemes are unprecedented and could provide a lifeline to many businesses. But you may find that they cannot provide all the funding you need – particularly if your business is ready to grow or develop.

Fortunately, there is still the usual range of commercial lending solutions which can help. In the current emergency situation, some lenders are reconsidering their positions - and some have even withdrawn from the market until conditions become more predictable. At Rangewell, we know the lenders who are still ready to help with your funding needs.  

Some of the key types of lending that may be important in the next few weeks and months include:

Cashflow support funding

Cashflow support can provide a reserve of cash to tide a business over a spell when income is reduced - as it is for most enterprises in the current market. These usually take the form of a short-term Unsecured Loan. Unsecured business loans don’t require a charge over a property, while secured loans do.

Cashflow loans can be arranged on the following basis:

• Borrow from £1,000-£500,000 – or up to £5m through the Coronavirus Business Interruption Loan Scheme (CBILS)
• Terms from 6-60 months
• Complete in 5-7 days – even faster with some lenders

Revolving Credit Facilities

Revolving Credit Facilities - also known as Overdraft Replacement - allow you to borrow and repay funds as required. They can be a simple way to increase your financial resources, giving you the cash you need while you need it, and with no changes when you do not draw down funds. Some things to be aware of with Overdraft Replacement include:

• Some revolving credit facilities may qualify for CBILS
• Completion can take place very quickly, in 2-4 days with some lenders

Asset Refinance

Where your business owns solid assets, from tooling to kitchen equipment, you can use Asset Refinance to raise finance against them. These facilities can work much like a loan, or as a sale and leaseback. You release the investment you have made in the asset to use again – and they can provide a particularly cost-effective solution for your financial needs.

• As security is offered, you can expect a lower rate than those offered through an unsecured loan
• These facilities can often be completed in 7-10 days

Commercial remortgages

Commercial Mortgages can be used in a similar way to Asset Refinance to raise capital, although in this case, the asset is your business premises. Very large sums can be available, often up to 70% of the market value of your premises.

• The rates offered are usually very low
• Terms are available up to 25 years

Commercial mortgages can take around 8 weeks to complete, and may not be ideal where funds are needed urgently. An alternative is a Bridging Loan which can be used to provide finance -although costs will be higher.

Getting professional help with your finance needs

At Rangewell we help secure all types of funding for all types of business – and during the current crisis we can provide the quickest way to find the funding you need.

Call us now – our experts are ready to help you with your finance problems during the coronavirus crisis.

We understand the pressures you are under – and our service is absolutely free.