There are very few businesses that haven’t been impacted by the COVID-19 pandemic.
For some, it has resulted in a manageable dip in business, while others have struggled to keep their heads above water. However, they all appear to be united when it comes to leaning on the considerable support offered by the government during the crisis.
It’s thought that over £22 billion has been claimed so far by businesses in the form of government loans and guarantees. This huge clamour for state support will ease cashflow fears, and ensure employees can be retained, but are those businesses using the loans to plan ahead?
If your business is struggling at the moment, there may still be time to grab a loan and use it to not only see you through this period, but to also ensure you’re readying the business for the new era ahead.
The government is currently offering bounce-back loans that are worth 25% of your turnover, up to a maximum of £50,000. These have been available since the start of May and the government has confirmed that it will pay the interest for the first 12 months of the loan period.
The bounce-back loans have been incredibly popular. Over £14 billion was paid out across a staggering 464,393 loans to small businesses. And that happened within just two weeks of the scheme being launched.
Business interruption loans have also been available to SMEs since 23rd March. Aimed at businesses with turnovers of no more than £45 million, they’ve so far been claimed by over 40,000 firms – totalling £7.25 billion.
Feedback suggests that the application processes for these loans are relatively straightforward, and the numbers speak for themselves; businesses are getting them.
It’s therefore time to ask yourself: could a bounce-back or business interruption loan offer a vital lifeline for your business right now?
What about large firms?
The biggest businesses in this country haven’t been left high and dry by the government, either. Those who boast turnovers of £45 million or more have so far secured over £590 million via coronavirus large business interruption loans.
This came into effect from 27th April, when the government began offering large corporations loans of up to £25 million. For the titans of industry (i.e. those with turnovers of more than £250 million), the maximum loan available is currently £50 million.
Clearly, there is an awful lot of money being made available by the government, no matter the size of your business.
Treading an unpredictable path – together
“The path of the virus is unpredictable, and much change still lies ahead,” says Carolyn Fairbairn, director-general at the Confederation for British Industry. “All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and businesses. The greater the number of good businesses saved now, the easier it will be for the economy to recover.”
Fairbairn nails the point here, and although it’s a cliché, it bears repeating again and again at the moment.
We’re all in this together.
If you need an injection of capital to either stay afloat or to ensure your future plans aren’t scuppered – go for it. It’s of course important to remember these are loans and not ‘free money’ but providing your growth plan has been thought out strategically and modified to account for COVID-19, accepting government help is a smart move.
We appreciate these loans all sound rather similar, and the situation is changing rapidly. If you’re unsure which type of funding is best for you, or if you’d just like some general advice on how to tread the unpredictable path ahead, the Chandlers team is here for you.