With the reopening of the British business sector continuing slowly but surely, attention is turning to how small businesses will manage wage costs as the furlough scheme comes to an end. The government is providing help but firms also need to act independently.

Mini-Budget post-furlough incentives a boost for small businesses…

With regard to managing post-furlough wage bills, the Chancellor’s recent mini-Budget has provided some welcome news for small business owners. The government is offering a range of cash-based incentives to smaller companies to encourage them to retain staff and recruit new employees.

Included in the measures designed to help small businesses as the Job Retention Scheme is withdrawn, with the phasing out process running from now until the end of October, is a bonus of £1,000 for every furloughed employee that is still employed as of the end of January 2021.

Regarding the recruitment of new workers, small businesses in England will be able to take part in the government’s initiative to encourage apprenticeships. Between the beginning of August and the end of January 2021, firms that take on apprentices under the age of 25 will receive £2,000 per hire and £1,000 per new apprentice aged over 25.

…but owners will have to do more to afford rise in wage costs

The range of cash payments are a boost to small businesses, but in terms of the money available, for many firms, it is likely to be a drop in ocean. Given the huge impact of Covid-19 and the difficulties businesses face in reopening and targeting new growth, they will need access to a much broader range of funding to ensure that they can keep staff and keep going.

One of the funding options that small business owners should be aware of is alternative finance. Alternative lenders can help them manage the transition out of the furlough scheme and the resultant increase in wage costs.

How alternative finance can help SMEs manage ‘normal’ wage bills

In the wake of prolonged caution from traditional lenders, alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding are proving a vital source of capital for small businesses, both for safeguarding cashflow and for essential investment. These facilities, which offer a more personalised approach to lending, are helping small businesses survive and grow.

Tellingly, alternative finance is playing a key role in the government’s Covid-19 business support strategy, in particular with regard to the Coronavirus Business Interruption Loan Scheme, which offers access to a range of finance facilities, including alternative finance services.

Small businesses are starting to see some light at the end of the tunnel, but more challenges lie ahead, including the end of the Job Retention Scheme. If owners are to manage the rise in wage costs without making redundancies, they need to be aware of all the funding options available to them, from those announced by the Chancellor to alternative finance services.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.