With businesses quickly running out of money during the current lockdown and social distancing measures brought in to combat Covid-19, there is widespread concern over how businesses will begin trading once the pandemic has passed.

During these difficult circumstances and despite government intervention, companies face the harsh reality of having no cash reserves supporting them should they need them. This leaves companies at a higher risk of liquidation.

If you are in this position, what options do you have when you are able to reopen but have little or no cash left?

Small Business Grant Fund (SBGF)

If you are running a business in England and are in receipt of Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR), you are potentially eligible for a non-repayable grant of £10,000 to support your business upon reopening.

Retail, Hospitality and Leisure Grant Fund (RHLG)

If you are a retail, hospitality, or leisure based business within England you may be eligible for a grant under this scheme, as follows:

• £10,000 grant if your business property has a rateable value of up to and including £15,000

• £25,000 grant if your business premises has a value of more than £15,000 and less than £51,000

This grant funding has been provided to the local authorities, if you are eligible you will be contacted to arrange payment.

COVID-19 government loan schemes

The government has multiple loan schemes for businesses including the CBILS and the BBLS, these offer businesses access to government backed loans that can assist business begin trading after Covid-19.

• The government is backing 80% of each CBILS loan, should you meet the criteria and be found eligible you could potentially secure funding of up to £5 million for up to 6 years. Interest on these loans for the initial 12 months is paid by the government, who also cover lender fees and charges

• The Bounce Back Loan Scheme has been designed to assist smaller businesses who have up to 10 employees, however this scheme is also open to larger businesses. This scheme offers loans from £2,000 up to 25% of business turnover up to a maximum £50,000. No payments are required for the first 12 months, the interest rate is fixed at 2.5% for the full loan term, similar to CBILS the government pays the initial 12 months interest.

However, with large amounts of businesses in financial distress, there has been delays with sanctioning applications for these loans. This could cause issues with securing the required finance to begin trading again.

If you can’t risk waiting any longer or believe that the governments loan scheme is unsuitable for your business, you may want to consider alternative funding that does not involve banks. 


Invoice finance

Invoice discounting and factoring could be suitable if your business sells goods or services on credit, and you run a sales ledger of value. This form of funding is based on the value of the sales ledger, with this form of funding the financers do not need extensive proof of past business performance – instead, minimal bad and uncertain debts are key to a successful application.

This form of finance provides regular cash injections each month and as sales increase, this removes the fear of low cash reserves.

Asset based lending

Some businesses are asset rich but cash poor, in these scenarios you may have assets that can be leveraged via a sale and lease agreement. This gives the business a cash lump sum. An alternative of this is selling non-essential assets allowing your business the chance to begin trading with more working capital.