The end of the furlough scheme is putting more pressure on small businesses. Managing cashflow is already a challenge as firms navigate the post-lockdown market and face rising bills. So, how can they can they keep their heads above water without state aid?

The furlough scheme has been a lifesaver for businesses, in particular SMEs, with the government spending almost £80 million on providing jobs support to over 1.5 million companies. But now the tap has been turned off.

While news of rising job vacancies and shortages of workers may suggest the timing is right, the adjustment will be painful for smaller businesses, not least as they fight to recover and regrow in a new-look marketplace and must manage a range of new bills, including the prospect of COVID loan repayments.

Headwinds mounting for under-pressure small businesses

According to a new study from EY, a third of small businesses are concerned that they won’t be able to repay their COVID loans. Tellingly, almost 60% of the companies that took part in the research reported that they had seen a decrease in revenue and profit margin, with a similar amount had witnessed a decrease in sales volume.

At the same time, small businesses must also find the cash to pay higher energy bills and higher fuel prices, as the country deals with gas and fuel crises. In addition, a rise in national insurance payments must be planned for in 2022. As such, for SMEs already operating on fine margins, accommodating the financial impact of the end of the furlough scheme represents a significant challenge.

So, how can these firms safeguard cashflow and maintain forward momentum now that the furlough scheme has come to an end and bills are rising on multiple fronts?

Alternative finance can help. Now more than ever, it is vital that business owners are aware of all the funding options available to them.

Post-furlough costs and how alternative finance 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.

End of furlough scheme and SME finance options

The end of the furlough scheme has long been signposted but it comes at a time when other headwinds are mounting for small businesses. Firms need to be able to manage the impact of this step and rising bills on cashflow. This makes awareness of the services of all lenders critical, including those of alternative finance providers.

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