The latest Covid-19 restrictions point to an extremely challenging six months ahead for small businesses. The Chancellor has unveiled new coronavirus financial support, but will it be enough? How can smaller firms manage cashflow and keep afloat?

While the small business sector has been braced for a tough winter, the latest round of Covid-19 restrictions is a brutal reality check. Firms face another incredibly difficult six months but, unlike in the spring, many will not have the financial reserves to help them through it this time.

Is the new state scheme enough and who needs more help?

The government’s decision to introduce a new job support scheme to replace the furlough scheme (which closes at the end of October) is a welcome move, as is the announcement that businesses will be allowed to repay loans as they grow and over several years. However, at the same time, many are arguing that these measures don’t go far enough and don’t provide the support that is needed.

Notably, there is a feeling among many that more loans aren’t what the small business sector needs – companies are still racking up debt, which will need to be repaid. This ties in with a growing call for more support for employers – to date the government’s main emergency finance schemes have been focused almost entirely on employees.

Maintaining cashflow into 2021 and how alternative finance can help

There is certainly much to debate going forward, but what is clear is, if small businesses are going to manage market conditions in the coming months and survive to see spring 2021 and beyond, it is critical that owners are aware of all the funding options available, from the government’s emergency loan schemes to the services of alternative lenders.

With regard to the latter, 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 maintaining cashflow and for essential investment. These facilities, which offer a more personalised approach to lending, are helping small businesses survive and target regrowth.

Notably, alternative lending is playing a prominent role in the government emergency support schemes, in particular the Coronavirus Business Interruption Loan Scheme, which is connecting firms and the self-employed with loan, invoice finance and asset finance facilities. This profile is helping cement the reputation of alternative finance in the business sector.

What small businesses need to know about funding options

Winter will undoubtedly be a hugely testing time for small businesses – the latest Covid-19 restriction have left owners in no doubt about that. Accessing finance will be critical to survival, in terms of maintaining cashflow and ensuring liquidity. As such, it is important that owners consider all sources of funding, including alternative finance.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.