2021 is set to be another turbulent year for the economy and for SMEs especially. Whist the roll out of the vaccine offers us hope that the COVID nightmare is soon coming to an end; there remains a year of uncertainty. Alongside the consequences of the pandemic, the UK’s recent departure from the EU has left us with many unanswered questions about supply chains and trade. Here, we discuss the benefits of a business loan, and how you can protect your business against the adversities 2021 may throw your way.
Brexit:
The main concern that business may have with the uncertainty of the Brexit deal, is whether it will affect cash flow across critical supply chains. If Brexit does have an impact on these cash flows, you may ask how to mitigate against a shortfall in the lifeblood of your supply chain that directly impacts your ability to operate. A delay to a supply chain can not only have a knock-on effect on the efficiency of just-in-time, consumer demand but also on the ability to manage the receivables and payables of an organization’s cash flow. So how do we manage this situation if it happens?
It may make sense to take advantage of buyer supply chain finance (SCF) schemes to build a stockpile of cash to manage through the leaner times ahead of Brexit. Supply chain finance is a business loan that maximises working capital for businesses by managing payments to their supply chain. SCF facilities vary from lender to lender, and they can be either buyer or supplier led. Buyer led facilities typically involve the buyer incurring the costs and extending the creditor payment terms with the lender. Supplier led facilities involve the supplier incurring the cost of early discount. Contact the team at Funding Bay to find out more about supply chain finance, and if it is the right facility for you.
Invoice finance:
Lockdown has undoubtedly caused SMEs a bucket load of anxiety and uncertainty, about how their business can function and how they can adapt to adhere to the government guidelines. The best way to keep your head above the water as a business is to keep a stream of income going. This may be a challenge for all non-essentials shops and businesses who have been forced to close their doors due to the recent restrictions. You should look to move to selling products and services online, setting up a streaming service, or provide home delivery where possible to not only keep your customers happy and involved but keep your income going. It is also a crucial time to look after previous clients, and work with them so you can continue to have their support. For example, give discounts to customers that can make quick payments, send out invoices in parts to customers on long-term collaborations to get paid throughout the project, or ask for advanced payments for big assignments.
You may also want to consider using invoice finance. Invoice finance is a business loan that allows businesses to release cash tied up in their aged receivable account. A lender, such as Bibby Financial Services, will provide your business with your unpaid invoices in advance, so that you can free up your cash flow as you do not have to wait until you receive the invoice payment. Get in contact with Funding Bay if you are interested in invoice finance.
CBILS:
A sure-fire way to achieve stability amidst this period of uncertainty is to consider the government backed loan scheme CBILS (Coronavirus Business Interruption Scheme). It was designed to help businesses bounce back from COVID and invest in their growth. The business loan has already been a lifeline for thousands of small business owners around the country. CBILS loans are aimed at firms struggling to survive the current climate but can also be used to support growth strategies. Under the CBILS scheme, the government lends loans of up to £5 million and charges are covered for the first year. More than 70,000 UK businesses have been approved, with £14 billion in CBILS funding.
44 accredited lenders are currently lending under the CBILS scheme. Funding Bay work with a panel of these lenders including, Nucleus, Iwoca, Bibby, Ultimate Finance and Funding Circle, and our team of experts work to ensure that the right lender is matched with the right business. Funding Bay has so far helped raise over £25 million for businesses. Get in contact with a member of our team here.
Whilst 2021 is set to be another unpredictable year, you can manage your business’s risk and stability with alternative finance. Funding Bay is here to help you navigate through the world of alternative finance, and find your business the most suited loan.
