If the government sticks to its plan, the furlough scheme will close at the end of September. This has serious implications for many small businesses that owe their survival to the initiative. How will they manage their cashflow when this support stops?

The Coronavirus Job Retention Scheme has played a major role in propping up the UK economy since the pandemic hit in spring 2020. It has provided an estimated £66 billion in emergency support, safeguarding some 11.6 million jobs. But on September 30th, the government will turn off the tap and this poses a threat to many businesses.

Speculation is growing about the impact of the closure of the scheme – there are reports that a million jobs are at immediate risk and a great many firms face going to the wall. Whatever the reality for business owners, it is clear that for many firms, the end of this initiative will put significant pressure on already strained resources.

Why the end of the furlough scheme is a major step

While there has been an upturn in optimism in recent months as the country and the economy have opened up further, market conditions remain challenging, in particular for businesses in sectors that are still markedly affected by the pandemic. For these firms and others, the prospect of the loss of the financial aid from the furlough scheme, and indeed the need to start repaying loans in the near future, is daunting.

Notably, the government has already extended the furlough scheme on multiple occasions and while it has indicated that it will not do again, such a move shouldn’t be ruled out. Alternatively, it may choose to beef up the Restart, Kickstart and Recovery Loan schemes to help those firms most under threat from the closure of the furlough initiative.

Whatever the course of development in the weeks and months ahead, many small businesses face increased pressure on finances and cashflow. So, how can they manage? Alternative finance can help.

Safeguarding cashflow and how alternative lenders can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic, services 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 recovery and regrowth.

Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme (open until the end of 2021). Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

The end of the furlough scheme and SME finance options

The road to recovery and regrowth was never going to be smooth and the planned closure of the furlough scheme represents a significant bump in the road for many small businesses. To weather this storm and put in place a strong platform for the future, it is vital that business owners are aware of all the finance options available to them, including the services of alternative lenders.

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