Beyond government support: finding finance in the post-lockdown world
As the dates for final applications for Government-backed loan schemes approach, it’s time to start looking at the options for funding in 2021 when state support dries up.
When Chancellor Rishi Sunak announced a raft of emergency measures to support business back in spring this year, most eyes were on the startlingly generous coronavirus job retention scheme (AKA the furlough scheme).
For many digital businesses and innovators already operating in a post bricks-and-mortar, post high-street mindset, however, the various loan schemes were equally interesting, if not more so.
They provided an opportunity for firms keen to pivot or diversify, rewarding agility and a desire to keep trading at a time when many were in retreat.
But now, as we enter the autumn, the final deadlines for applications are approaching.
The coronavirus business interruption loan scheme (CBILS) closes to new applicants on 30 September. A similar scheme for larger firms, known as the coronavirus large business interruption loan scheme (CLBILS), has a 20 October deadline. And the bounce-back loan scheme, offering loans of up to £50,000, is scheduled to close down after 4 November.
One final scheme, the little-noticed ‘Future Fund’, specifically designed for innovative businesses, also closes at the end of September.
Get your bid under the wire
Let’s be clear: the terms of these loans are very generous and if you have an appetite to grow, it’s well worth considering a last-minute application.
CBILS is aimed at businesses turning over no more than £45 million per year. It requires applicants to demonstrate that their business has been adversely affected by COVID-19 but would otherwise be considered viable by lenders. The scheme offers facilities up to £5m with the Government covering the first 12 months of interest and any lender fees.
CLBILS operates on a similar basis but is open to businesses turning over more than £45m, and offering loans from £50,000 up to £200m.
Finally, there’s the bounce-back loan scheme, created to fill a gap for support for the smallest businesses, with facilities of up to £50,000. Many traditional businesses have used these loans to adapt their premises by installing screens, contactless payment systems, and so on. Others have invested in new websites, digital marketing campaigns and ecommerce functions.
The Future Fund operates slightly differently. It requires an investor to apply with an eligible company, with the fund matching the amount provided by the investor up to a maximum of £5m.
Any business that survives the disruption of 2020, or even manages to thrive, will find itself in a relatively good position when it comes to finding finance in 2021.
First, lenders and investors will be keen to do business with those who’ve proven their resilience and flexibility as they loosen their purse strings post-pandemic. Whether you choose debt or equity, there may be some interesting offers around.
And, of course, the above is doubly true if you’re an innovator in fintech, edtech or medtech – all sectors which have come into their own in the age of distributed teams, remote teaching and the battle against the virus itself.
Secondly, there’s crowdfunding. It’s not as fashionable as it once was, perhaps, especially after a few high-profile failures and scandals, but it is still a good option for businesses with strong brands and/or truly desirable, innovative products.
Finally, a fundamental shift in working patterns triggered by global lockdown might make ‘bootstrapping’ an appealing option. Tighten your figurative belt, starting with ditching the expensive office space; review your business plan and cashflow model; and set yourself the challenge of growing without outside help.