2020 might be over, but companies worldwide are still grappling with the impact of the pandemic. And, as we settle into 2021, UK business leaders are faced with the continued stress and pressure of keeping their businesses alive.
The UK’s vaccine roll-out provides much needed hope and optimism for the future – and, while this roll-out is certainly exciting news, research also shows that it will take time to get the vaccine out to everyone who needs it.
Unfortunately, this means the vaccine could be too late for 72% of UK hospitality businesses who expect to close in 2021 unless they receive more financial support.
So what financial support is available for businesses in 2021?
In this article, we examine and compare the government schemes and grants currently available to support your business. We also explore a merchant cash advance with 365 Business Finance, and how this type of funding could very well sustain your business this year (even if you’ve applied for a government loan or grant, 365 Business Finance could still offer you a merchant cash advance).
Coronavirus Grant for Closed Businesses
Due to the National Lockdown, on the 5th January the government announced one-off top up grants, worth up to £9,000 for businesses in retail, hospitality and leisure. These grants are expected to help businesses stay afloat until spring.
Provided on a per-property basis, the total amount granted are as follows:
- £4,000 for businesses with a rateable value of £15,000 or under
- £6,000 for businesses with a rateable value between £15,000 and £51,000
- £9,000 for businesses with a rateable value of over £51,000
Businesses do not have to repay the grant. In addition, business rates relief and the furlough scheme have been extended to the end of April to further support businesses.
£594 million is also being made available for Local Authorities and the Devolved Administrations to support other businesses not eligible for the grants, which might be affected by the restrictions.
To apply, check with your local council.
Coronavirus Business Interruption Loan Scheme (CBILS)
The CBILS scheme issued by the British Business Bank offers financial support from over 100 accredited lenders, including Bank of Scotland and Barclays, to UK-based businesses impacted by the coronavirus.
To be eligible for the CBILS scheme, a business must:
- Have an annual turnover of no more than £45 million
- Have a borrowing proposal the lender considers viable, were it not for the pandemic
- Self-certify that the coronavirus adversely impacted the business
- Not be classed as a “business in difficulty”, if applying to borrow £30,000 or more
The UK government recently extended the CBILS scheme until 31 March 2021 and made changes to allow smaller businesses to access the funds they need. One main alteration was removing insufficient security as a condition to access the scheme.
If you have an existing application for a CBILS loan below £50,000, you can convert it to a Bounce Back Loan Scheme (BBLS), which makes sense for some businesses. If you require less than £50,000 now but may need more in future, you could in some cases convert a BBLS into CBILS at a later stage.
(Regardless of what government scheme or financial lending is right for you, investigating and analysing what’s currently available to support your business is crucial.)
Bounce Back Loan Scheme (BBLS)
The government also offers support for businesses through the Bounce Back Loan Scheme (BBLS). It enables smaller companies to access finance more quickly than the CBILS scheme since the BBLS only requires a single application form. After filling in a short questionnaire for their chosen accredited lender, SMEs can borrow between £2,000 and £50,000 up to 25% of their total revenue.
The BBLS is unsecured, and can last for ten years. If SMEs have borrowed less than they are entitled to, they can top up their BBLS to reach the maximum permitted amount (25% of total turnover). Borrowers will not need to pay any interest or make any repayments for the first 12 months, after which all banks will charge a fixed 2.5% annual interest.
You can apply for a loan if your business:
- Was established before 1 March 2020
- Is based in the UK
- Has been adversely impacted by the coronavirus
- Wasn’t classed as a “business in difficulty.”
Originally scheduled to end on 30 November 2020, the government extended the BBLS scheme until 31 March 2021.
Merchant Cash Advance
Even if you have a CBILS or BBLS loan, 365 Business Finance can offer £5,000 to £200,000 to support your financial needs for 2021.
Our cash advances offer instant funding through one all-inclusive cost without APRs or hidden extras, fixed terms or monthly payment plans. We approve 90% of businesses that apply, and funds are usually with you within 48 hours.
To be eligible, your business must be:
- Based in the UK
- Trading for at least 6 to 12 months
- Processing card payments through a card machine or online processor
- Processing at least £5,000 per month in card payments
We are the flexible alternative to a bank loan, where the repayments mirror your cash flow, so you only pay us when customers pay you.
(Example of how repayments follow your cash flow.)
Knowing how difficult it is to predict where your business will be in the near future, we require no security or business plans from you. Requesting a quote from us will also not affect your credit score.
Request a tailored quote today or get in touch to discuss anything regarding your business with one of our experts.
How to Get the Best Financial Support for Your Business
Businesses require different government support depending on their size, sector, and financial situation. The Bounce Back Loan Scheme (BBLS) allows SMEs to apply to accredited lenders by filling out one simple form. BBLS are also 100% government-backed for lenders.
The BBLS are capped at £50,000 or 25% of the total turnover (whichever is lower), which isn’t enough for many businesses. By contrast, Coronavirus Business Interruption Scheme (CBILS) offers up to £5m, making it the best option for SMEs that require more funding than the BBLS offers. The application process is more complicated for the CBILS, and you yourself must choose your lender.
With a merchant cash advance, you can still receive funding between £5,000 and £200,000 even if your business has accessed government support through CBILS or BBLS. There is also the benefit of no APRs or fixed monthly payments – repayments are taken as a small percentage of your future debit and credit card sales, meaning you only repay when customers pay you.
Regardless of what government scheme or financial lending is right for you, investigating and analysing what’s currently available to support your business is crucial. As unpredictable as 2020 was, it’s safe to say that identifying and planning for possible contingencies is the best way to navigate a hopeful 2021.