While the end of the Covid-19 era seems to be in sight, SMEs are still very much fighting for survival, not least as the prospect of repaying Covid-19 loans looms. All eyes are on Budget 2021 for help. The questions are, what do firms want and what are they going to get?

Despite the rapid rollout of the Covid-19 vaccine and increasing optimism about a return to some form of normality later in the year, small businesses are still facing a tough time. Notably, with a number of government emergency funding schemes scheduled to close, concern is growing about the ability of smaller firm to repay loans.

According to a new study by Sage, only 63% of businesses are confident in their ability to repay these loans. Tellingly, the research also reveals that the pandemic is set to burden the average SME with additional debt of over £170,000 per year.

What will SME help in Budget 2021 look like?

As such, it comes as no surprise that small businesses are looking to the Chancellor to alleviate some of the pressure and help them recover and regrow in the second half of the year and beyond.

Notably, there have been calls for a cut in VAT and further support with regard to business rates.

Whether these wishes are granted remains to be seen. It is more likely that Budget 2021 will bring an extension of the Coronavirus Business Interruption Loan Scheme and other initiatives as a means of providing ongoing support to businesses, and the deferment of repayment schedules.

Whatever the Chancellor announces, small businesses face a very challenging year ahead, in which managing capital and safeguarding cashflow will be vital to survival. Key to this financial planning is awareness of all the funding options available, from government emergency schemes to the services of alternative lenders.

Interestingly, growing demand for alternative lending services, such as invoice finance and asset finance, has been flagged as a key SME finance trend in 2021 as businesses plan for life after the pandemic.

Covid-19 loan repayments and how alternative finance can help

With regard to the alternative lending sector, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the coronavirus pandemic, alternative finance facilities such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target regrowth.

Notably, alternative lending is playing a prominent role in 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.

Repaying Covid-19 loans and SME finance options

The Chancellor may well ease the immediate pressure regarding the repayment of Covid-19 loans in Budget 2021, but the strain on SME finances will remain. Coming out of the Covid-19 era in a position to recover and regrow will not be easy. This is why is it is vital that SMEs are aware of all funding options.

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