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How to help your clients grow their businesses in a post-Brexit economy

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.

How to help your clients grow their businesses in a post-Brexit economy
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  • Stuart Lawson
  • January 28, 2021
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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.

What’s changed for businesses in a post-Brexit world? 

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:

  • export levies
  • deferment account fees
  • disbursement charges

“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.

Brexit transition key changes: recap

  1. Goods - importing and exporting goods to the EU involves new paperwork.
  2. Services - professional qualifications must be checked with the appropriate EU regulator.
  3. Staff - additional requirements for work, residence and travel apply.
  4. Business travel - business travellers must check visa/work permit requirements.
  5. Data - new rules apply around Intellectual Property (IP).
  6. Accounting/Reporting - business’ accounting and reporting could be affected.
  7. EU funding - EU funding will stop and programmes may change for specific sectors.
  8. Brand names/ designs - rights holders must apply for separate UK trademarks/ designs.

(If in doubt, you can always refer your clients to the UK government’s Brexit Checker Tool[3].)

The importance of cash flow headroom

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.

CBILS and working capital finance

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.

What are the benefits of CBILS benefits for SMEs:

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. 

H4: Loan breakdown:

  • No fees to be paid and no payments for the first 12 months
  • Loan amount from £50,000 to £5,000,000
  • Loan term up to six years
  • AR from 3per cent
  • No personal guarantee

H2: Types of working capital finance include the following:

  • Invoice finance an invoice finance facility enables businesses to leverage unpaid invoices to provide their business with a quick cash injection.
  • Bridging loans  a bridging loan is a type of short-term business finance designed to ‘bridge a gap’ in a company’s finance, and can be used for a range of purposes.
  • Asset finance/refinancing asset finance allows businesses to purchase equipment and pay for it incrementally, while asset refinancing involves borrowing money which is secured against the value of the business’ existing assets.
  • Working capital loans – short to medium-term working capital loans are designed to increase the amount of cash available to a business, enabling them to grow.
  • Flexible overdrafts – overdrafts from traditional lenders can be hard to come by, however there are lots overdraft options on the alternative finance market nowadays.

[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

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