Loan schemes provide over £50bn, but is it a long term solution?


Loan schemes put in place at the beginning of the Covid-19 pandemic have seen more than 1.23 million British businesses borrow over £50 bn.

The end dates for the loan schemes are getting closer, and business will need to act fast if they are still hoping to secure funding through the Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme or the Bounce Back Loan Scheme.

Statistics from the British Chamber of Commerce’s latest business impact tracker report show that 30% of firms surveyed had made use of the schemes, helping to combat the fact 50% of firms reported a slight or significant decrease in their cash flow.

While some businesses are starting to see slight improvements in terms of trading conditions (38% reported a rise in revenue from UK customers), it is clear there is still a long road ahead and many businesses will continue to face significant challenges.

So what can businesses do outside of government loans to help manage their cash flow through this period?

Prioritise cash flow

This may seem an obvious tip when you want to improve your cash flow, but what we are really referring to is prioritising your cash flow over your revenue.

Of course, that doesn’t mean you should ignore your ability to generate revenue completely (more on that shortly), but for the time being pushing cash flow to the top of your list can help to protect your business should it face unexpected costs down the road.

If possible, building a cash reserve that covers 3-6 months is ideal, but any cash buffer will help should you face difficulties.

Once you are confident that your business is generating enough income to cover costs, and you have some sort of cash buffer, then you can turn your attention back to increasing your revenue. However, it is crucial to remember to keep cash flow a priority and do whatever you can to maintain a strong cash position throughout this difficult period. 

Eliminate unnecessary spend

One way that you can help to improve your cash flow is to eliminate unnecessary spend. This can be a great short term solution to stop some much-needed cash leaving the business, but if you’re careful this can also be a good long term strategy.

You do not want to start cutting spend from your business essentials, as that will have a negative impact on your business down the line. Try and consider first cutting expenses that you can do without permanently. Maybe its software that is no longer needed or old memberships that no-one uses.

A key place many businesses will be considering cutting costs is in their office space. If you are happy with your teams working from home do you still need a physical location, or can you scale down to a smaller, cheaper office?

If you do still need to cut costs further, look at cheaper alternatives to your current solutions or ways to amalgamate different costs into one, such as through updated software that covers multiple tasks.

Take advantage of opportunity

One of the reasons it’s important to be careful with how you get costs down is that you might miss out on an opportunity that could make all the difference to your business during this time. Provided you are keeping a tight control over your cash flow, there is no reason you should not still be looking at new opportunities that could benefit your business.

One key place many businesses cut costs is in their marketing budget, but if your competitors are spending less on marketing, now could be a great time for you to push some new campaigns.

Many businesses have also found that adapting the business to cater to new opportunities has seen them through the last few months. Small businesses and start-ups have traditionally found it easier to pivot into new markets than larger, more established businesses, but the current environment has meant that people have had to get a lot more creative if they want their business to survive. Carrying these agile learnings forward can help businesses get through more difficult times ahead.

Use an invoice finance facility

Invoice finance can quickly become your secret weapon in keeping your cash flow healthy. It allows you to release cash against the value of unpaid invoices, keeping cash free to fulfil any orders ahead of getting paid by customers and manage day-to-day expenditure. It can also help with cash flow forecasting, which means you can keep tighter control over where money is going out as well.

At a time when late payments are a growing problem, invoice finance allows you some peace of mind, and depending on the facility you choose you can additionally outsource your credit control to the provider, or incorporate bad debt protection. This flexibility can help you find a solution that works not just for the here and now, but will continue to benefit you in the long term as well.

Learn more about the types of invoice finance facility and how they work here.

Think about future sales

When you know there are likely to be rough times ahead, now is the time to do something about it. There are several strategies that you can employ fairly quickly now that will pay dividends down the line.

One option could be to offer an extended free trial of your product or services, or another freebie that suits your business, with the aim that three to six months down the line those trials will turn into paying customers when you need them the most.

You need to find the right offering of course – something that will leave customers wanting more, requires minimal time and cost from your business and can be rolled out to a particular market that you want to target.

Similarly, you could consider adjusting your warranties, guarantees and returns policies to reflect the times, offering more leniency that may mean you see a few more returns etc, but many more customers will be persuaded to part with their money in the first place as it feels like less of a risk.

In short, anything you can do now that could help to generate more sales down the line (and give you something to push on your marketing channels) will be hugely beneficial.

Finding funding

If you are looking for funding facilities, whether that’s invoice finance or any other type of funding your business requires, we can help.

No matter the economic climate, the right funding at the right time can often be make or break for a business. With over 20 years’ experience, we specialise in introducing businesses to the funders and funding facilities that can make a difference to them.

Call us on 0800 9774833 or request a call back to discuss your requirements with one of consultants and take the first step to finding the funding you need.


Some of the funders we work with

  • Sonovate
  • InvoCap
  • 4Syte
  • Metro Bank SME Finance
  • Santander Corporate & Commercial
  • Blazehill Capital
  • Lloyds Bank Commercial Finance
  • Barclays
  • Pulse Cashflow Finance
  • Davenham Asset Finance
  • Berkeley Trade Finance Ltd
  • Investec
  • Castlebridge
  • Skipton Business Finance
  • Time Finance
  • Nationwide Finance
  • Giant
  • Woodsford Tradebridge
  • Team Factors
  • Merchant Money
  • Cynergy Business Finance
  • Partnership Invoice Finance
  • eCapital Commercial Finance
  • Royal Bank of Scotland
  • Haydock Finance Ltd
  • Peak Cashflow
  • Aldermore Invoice Finance
  • Tradeplus24
  • Clear Factor
  • Accelerated Payments
  • Close Brothers Invoice Finance
  • Leumi ABL
  • Regency Factors
  • ABN AMRO Commercial Finance
  • Kriya
  • Ultimate Finance Group
  • Davenham Trade Finance
  • Optimum Finance
  • Praetura Invoice Finance
  • Roma Finance
  • IGF Invoice Finance
  • PNC Business Credit
  • MaxCap

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