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Despite the disruption and uncertainty of 2020, the UK ranked fourth in the Global Innovation Index 2020[1] and continues to be one of the most entrepreneurial countries in the world.
COVID-related redundancies are compelling individuals to set up businesses of their own, and the Trade and Cooperation Agreement (TCA) has created more clarity around what the new trading relationship between the UK and EU will look like moving forward.
So, with the Brexit transition period out of the way and the COVID vaccination programme underway, some of your clients may be seeking funding to boost their working capital ready for growth. Others, however, may require financial support to mitigate ongoing challenges.
The UK’s departure from the EU’s Single Market and Customs Union has brought about significant changes for businesses. Almost every company, large or small, is likely to be impacted by new legislation in one way or another.
As we’ve seen in the news, the transition hasn’t been plain sailing for everyone, not least of all UK fish exporters who are struggling to sell into European markets due to border delays. Meanwhile, leading supermarket chains report that new border rules and bureaucracy could cause disruption and food shortages in Northern Ireland.
Small UK-based businesses who were able to access the EU single market seamlessly prior to Brexit are voicing concerns about exporting into continental Europe moving forward.
Speaking with The Guardian[2] in January, the director of Leon Paul, a small business that designs and manufactures equipment for sword fencing, describes how the following three new charges have impacted his firm:
“As far as I can see, currently, companies like ours in the UK are not going to be able to do ‘end sales’ to customers in the EU any more. Particularly, small orders for anything under £100 will be completely impossible.”
A degree of legal uncertainty is also expected as the new regulations become established and ‘bed in’. During this time, it’s never been more important for your clients to be able to access the business funding they need, when they need it.
(If in doubt, you can always refer your clients to the UK government’s Brexit Checker Tool[3].)
If there’s one thing we’ve learnt over the last year or so, it’s that nobody can predict what the future will hold. To use another adage, it’s always wise to ‘expect the unexpected’.
In order to react quickly to unforeseen events, maintaining healthy cash flow is critical.
Your clients should ensure that they factor in financial headroom when considering their business finance options. Doing so will help them weather the storm in times of instability and enable them to grow when market demand picks up again.
Working capital finance is designed to give the amount of cash available to a business a quick boost. It can be used to fund growth projects, such as purchasing more inventory to meet an increase in demand, or to meet ongoing operational costs.
Secured and unsecured finance is available for a range of businesses – even those with a less-than-perfect credit history. As well as contending with the new post-Brexit rules, some of your clients might be experiencing cash flow problems caused by the COVID-19 pandemic.
If this is the case, they could be eligible for a CBILS loan.
The scheme, designed for SMEs with a turnover of under £45 million, has been extended until 31 March 2021. Businesses that haven’t yet received a loan for the maximum amount available (25 per cent of their annual turnover) may also be able to apply for a second CBILS loan.
Currently, there are over 100 accredited lenders providing finance to businesses through the CBILS scheme. As an adviser to your SME clients, you can help by connecting them to a reliable source of funding and providing them with accurate information.
With the coronavirus emergency loan scheme extended to the 31 March 2021 by the government, there is still plenty of time for your clients to make use of a CBILS loan to get more working capital to get their business back on track, to use as a safety net or to fuel welcomed growth.
[1] Global Innovation Index – https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020/gb.pdf
[2] The Guardian article – https://www.theguardian.com/politics/2021/jan/17/shock-brexit-charges-are-hurting-us-say-small-british-businesses
[3] Brexit Checker Tool – https://www.gov.uk/transition
Stuart Lawson, chief revenue officer, Funding Options