What assistance can SMEs affected by COVID-19 expect from lenders?

March 23, 2020

The loss of trade and high sickness levels which are likely to occur for many SMEs as the prevalence of COVID-19 increases poses a considerable challenge for long-term sustainability. Alongside the traditional pressures which businesses face in their fight to survive, coronavirus brings added complications. Although this is a difficult time for many companies, help is out there! Here we take a look at some of the help which the government has put in place to make lending easier for enterprises affected by recent events, as well as additional measures that SMEs and lenders have available to ease financial difficulties.

Government-backed support for businesses affected by COVID-19

A recent update has brought to light a set of measures put in place in order to support businesses through the disruption caused by COVID-19. This includes the opportunity for businesses and employers to claim back up to two weeks Statutory Sick Pay (SSP) for any absences due to Coronavirus. In addition to this, there will be a 12-month business rate relief for retail, hospitality and leisure businesses, as well as, a one-off £10,000 grant for businesses eligible for Small Business Rate Relief (SBRR). In terms of loans, the introduction of the Coronavirus Business Interruption Loan Scheme, means that the government will guarantee up to 80% of a business loan value. Lenders will not have to pay for the guarantee on business loans (in contrast to the current Enterprise Finance Guarantee Scheme). The scheme is being operated by the wholesale British Business Bank, with most major banks and lenders providing eligible loans.

Refinance is an option

For businesses who already owe money, refinancing may be an option. Refinancing often allows companies to borrow a larger amount at a more competitive rate. This can provide cash strapped companies with the additional money they need to remain trading, at the same time as providing a manageable framework for repayment.

Borrowing against assets, including invoice factoring

As well as straightforward lending and refinancing, there are also borrowing options based on the assets a company has. If you're owed money by customers, selling their invoices (invoice factoring) to a third party could generate much-needed short-term income. Alternatively, some lenders will allow an SME to borrow using an asset as collateral. Whilst this option needs to be approached with caution (it's important that you are confident of being able to make the repayments, or you could end up losing your asset), it can be a useful solution in some circumstances.

If your business is struggling, receiving pro-active debt advice is often the best step to take. The sooner you're aware of your options and what help is out there, the faster you will be able to sort out some solutions that work for you and your business. If you would like to find out more about how refinancing could provide your business with the cash injection needed to recover from a coronavirus setback, please get in touch.

Wiseman Finance Limited is a credit broker and not a lender. Finance is available subject to status. Terms & Conditions apply. Indemnities may be required. We work with a number of carefully selected credit providers who may be able to offer you finance, commission may be received. We are only able to offer finance products from these providers.

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