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Bounce Back and Spring Forward: The continuing development of support packages available for SMEs

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Bounce Back

They say six weeks is a long time in politics, well it’s even longer during lockdown!

On 17 March, just six weeks ago, the Chancellor Rishi Sunak announced the inception of an initial raft of financial support packages for businesses, with the promise of real money in real business bank accounts by the end of April. He has delivered with payments under the furlough scheme, initial CBILS loans and the beginning of rates-based grants starting to flow into the SME community. However, questions arose at the time whether he was promising enough. An 80% guarantee meant that banks still had to undertake full due diligence before lending, there was no clarification as to whether personal guarantees would be limited, and there was little initial guidance to either banks or SMEs on the application process requirements. This hampered access to support for some of the most vulnerable businesses.

Yesterday’s (27 April 2020) announcement of Bounce Back Loans came as a welcome relief to the SME community. The key features of this new scheme are:

  • 100% government backed loan
  • Loan value between £2,000 and £50,000
  • Cash access within days
  • Interest free for 12 months
  • Short, simple, online application process
  • Launch date for applications is Monday 4 May

The Bounce Back Loan Scheme complements the existing financial support measures including business rates reliefs, small business grants, tax deferrals, and the furlough scheme. All are designed to help businesses through the current crisis.

https://www.gov.uk/government/news/small-businesses-boosted-by-bounce-back-loans

But what about the future?

Spring Forward

The Future Fund, announced on 20 April 2020, seemed to mark a turning point in the government’s focus, moving from survival to looking at how the country, and business, initially recover and then have the opportunity to thrive when the “engines of the economy are fired up” again. We know that there will not be a flick of a switch and a return to the old normal, but both the country and the SME businesses which drive our economy should now be considering plans to restart, and then prosper once they are able.

How can a business emerge  from the crisis to maximise the opportunities that the new world will present.

The government would like to encourage innovative UK-based and UK-registered small businesses, with the Future Fund offering:

  • Convertible loans ranging from £125,000 to £5m
  • Subject to equal matched funding from private investors
  • Available to businesses that have raised £250,000 of equity in the last 5 years
  • Total fund of up to £250m
  • Initially open from May to Sept 2020

As more details emerge our COVID-19 hub will be updated accordingly.

The crisis has seen seismic shifts in attitudes to WFH (working from home – an acronym many of us hadn’t seen before March 2020) and leaps forward in technology implementation, as well as changed behaviours in social interaction and leisure and exercise pastimes.

There are opportunities for small innovative businesses that can spot and adapt to the changing needs of society as we emerge from the crisis.

https://www.gov.uk/guidance/future-fund

Mercer & Hole: Adding the strategy to the financial support packages

Our COVID-19 hub collates and digests the financial support measures which have been announced by the government. However, more than that, at Mercer & Hole we believe that building a future strategy designed to survive through and then thrive after the crisis is essential in both securing successful applications for the financial support available and as importantly, the application of the financial support received. Creating a future strategy now will help you to ensure not only that you survive, that you can repay additional debt being taken on, can bring back furlough employees, but can crucially identify and maximise opportunities which arise to prosper.

Please do not hesitate to contact us to discuss access to any of the government initiatives, or to plan for your business’ future.

Henry Page

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