Market Update 2021 – Business Finance

What Finance is Available to Your Business in 2021?


2020 was undoubtedly the year of government support. The level of support via CBILS, Bounce Back Loans, furlough, grants, etc.. was previously unimaginable. Many businesses took up the support packages but many also fell through the cracks. 2020 ended with an extension to the CBILS scheme and 2021 has started with a new lockdown and the announcement of grants of up to £9,000 for businesses in the hospitality and travel sector.



Whilst the new lockdown was somewhat predictable it did throw a curve ball at many businesses. Especially those in the retail, travel and hospitality sectors. Think also of the businesses that supply these sectors. Last minute announcements play havoc with plans and make it hard to manage supply chains and cash flow.


In terms of business finance what is the state of play as we enter 2021?


The government backed loan schemes are still open having been extended. However, the same criteria apply in terms of funding limits. Businesses can borrow 25% of turnover of 2 times annual wage bill. Bounce Back loans are still capped at £50,000. The good news is that you can have more than one CBILS loan or could consider a CBILS revolving credit facility. The bad new for many businesses is that they have already borrowed the maximum based on the basic criteria so further support is unavailable for many.


The vaccine offers hope of a return to normality. As trading levels pick up, liquidity within the supply chain is likely to be an issue. Suppliers will be stricter on both credit limits and credit terms and customers will inevitably pay slower.


So what other solutions exist for businesses?


The key will be to focus on cash flow and minimising the costs of funding. We can help with this.


Invoice Finance is an excellent solution to help businesses smooth cash flow issues. It means that you can access up to 100% of the gross invoice value at the point that you raise an invoice. It can release the cash tied up in unpaid invoices allowing you to pay wages and suppliers on time. If you already have a facility in place we would definitely recommend reviewing that facility. When reviewing facilities we focus on maximising cash generation and reducing costs. Our most successful review in 2020 resulted in a saving of over £120,000 a year and released an additional £1.1.m of cash on day 1.


There are also bolt on facilities that can sit alongside an invoice finance facility. Trade Finance or Supplier Finance can help to pay suppliers ahead of invoices being raised to customers. These facilities can help to finance your whole trade cycle. Stock Finance can be used to release cash tied up in the stock in your warehouse. For more detail on this please click here


If you are looking to purchase new machinery we can offer Hire Purchase agreements or Lease agreements that can spread the repayments over the life of the asset. Alternatively, you may have plant and machinery within the business that you own outright. If you want to provide a cash injection to the business, asset refinance could be a good option.


If you have property within the business you obviously have the opportunity for commercial mortgages, secured loans and bridging finance. Charges on property can also be used to support other types of facilities such as asset finance or invoice finance where the underlying asset is perhaps not ideal.