As sticking plasters go, the help for small businesses laid out in Budget 2021 is significant, but there is a need to look further down the road. How can firms fund longer-term post-Covid-19 rebuilding and regrowth?

Furlough scheme extended; new loan initiatives announced

There was much to welcome for small businesses in Budget 2021. As widely expected, the Chancellor extended the furlough scheme, which will now run until at least the end of September this year.

Also, the government is rolling out two new Help to Grow schemes for small- and medium-sized businesses – these will provide access to management training, technology advice and discounted software – and is introducing a new Recovery Loan Scheme, which will make available loans of between £25,001 and £10 million to businesses.

Restart grants, VAT holidays and tax rise caps

Small firms will be able to claim restart grants, with hospitality and leisure businesses qualifying for larger sums. These firms, as well as those in the retail sector, have also seen their business rates holiday extended. Also extended is the VAT cut for hospitality and tourism sectors.

Notably, while corporation tax will rise significantly in 2023 (to 25%), the rate for firms with an annual profit of £50,000 or less will remained capped at a lower rate (19%). More contentious is the help put in place for self-employed workers. While the SEISS has been extended, various caveats apply to qualification and there has been criticism of the continued exclusion of a large number of people.

Life support system is secure but what about recovery?

Overall, it seems fair to say that most small firms will be satisfied with Budget 2021. The Chancellor has laid out various measures to help these businesses survive what hopefully will be last lap of Covid-19.

So, the life support system is solid, but what about recovery and regrowth? The schemes, initiatives, grants and holidays will come to an end and small firms will have to survive without them. They will have to have the financial planning and structures in place for this critical development phase – not least to ensure cashflow is safeguarded and that there is capital for investment.

Clearly, it is essential that small businesses ensure that they receive all the help that they are entitled to through the government’s various emergency loan and grant schemes. But it is as just as important that they do more and that they are aware of all funding options available to them, including the services of alternative lenders.

Post-Covid-19-era growth 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 continuing to play 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.

Budget 2021, post-Covid-era growth and SME finance options

Budget 2021 has been broadly positive for small businesses in that the various measures will provide a good degree of short-term security. However, the picture is bigger and these firms need to consider mid-to-long-term development and how they are going to finance it. This is why is it vital that business owners are aware of all the finance options on the market, including the services of alternative lenders.

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