COVID-19 pandemic is taking its toll on both the lives and livelihoods of the UK nation. For businesses, the challenge of regaining the monetary losses suffered in recent months commences. This is particularly true for SMEs.
Small to medium-size businesses account for 50 per cent of total revenue that is generated by businesses in the UK. But one concern on every business owner’s mind is how their finances can be supported during this current climate.
With this in mind, we discuss a variety of different ways that SMEs can support their finance department during these difficult to predict times.
As of 17th March, the chancellor made a pledge to all businesses that government-backed loans will be available to SMEs through the British Business Park. Offering loans that support up to £5 million in value, this is one of the lifelines that SMEs should look into. It could help prevent negative cash flow results, or worse, forced business closure.
The overall purpose of this scheme is to provide access for SMEs to loans or overdrafts when necessary. The government will give lenders 80 per cent for each loan that SMEs seek in order to support everyone through these difficult times. Perhaps one of the main benefits to consider of this temporary scheme is that no interest has to be paid within the first six months of taking the loan out. Plus, no charges will be given to both businesses or banks for this loan scheme.
Supporting your business financially is not just about finding new sources of money, but about how to save it too. Finding effective ways to reduce your business costs could help offer some financial relief.
Some effective ways to cut your costs could include:
The chancellor announced the coronavirus job retention scheme, commonly referred to as the furlough scheme, has been extended until the end of April 2021. Despite initially only lasting till May, this extension will help support not only SMEs, but the employers working within them too. The government has pledged to cover 80 per cent of all wages up to a maximum £2,500 per month.
With more than 9 million employees furloughed over lockdown, it's clear that this scheme is still highly valuable for SMEs. With this in mind, if you are an SME struggling to cover overhead costs as the pandemic continues, make use of the furlough scheme to help support both your business and staff.
Since the coronavirus pandemic took the world by storm, every day is a learning curve for both the nation and government. With this said, keep up to date with all the latest policies and schemes that are being introduced to help support your SME in every way possible.
Of course, many determinants can affect how beneficial these methods are when it comes to supporting SMEs. However, no business should feel helpless. Finding financial support and relief throughout this time all depends on knowing the right place to look.