With the coronavirus pandemic showing no signs of abating, the threat to businesses countrywide is obvious.

Thankfully, there are a number of ways in which to navigate this deeply unsettling period, giving realistic hope of a prosperous future for many.

Whether you are a charity, small business (SME) or a company that’s raised at least £250,000 in equity investment from third parties in the last 5 years, there is a way out of the current predicament, and on generous terms.

Whilst it’s important that companies don’t overstretch themselves financially, the knowledge of loan availability should ease the pressure on those who can’t see the wood for the trees at present.

Below, we take a look at five ways in which YOUR business could fund their way through the weeks and months ahead, until business life can return to some kind of normality.

UK Government Future Fund

UK-based companies are currently able to apply for a convertible loan of between £125,000 and £5 million, to support continued growth.

An initial £250 million has been made available for investment through the scheme, and the government will consider increasing this if needed. Private investors will at least match the government investment in these companies.

In addition to the Future Fund, Ministers have allocated £40m through the Fast Start Competition to drive forward new technological advances, and to support innovative start-ups.

This will give companies a vital boost, fast-tracking the development of innovations borne out of the coronavirus crisis.

Who is it for?

The Future Fund, delivered in partnership with the British Business Bank, is open to UK-based firms, particularly in the fields of technology and innovation, that have previously raised at least £250,000 in equity investment from third parties in the last 5 years.

They will also need to have investors to provide funding to be matched by the government, and have half or more of their employees based in the UK or generate at least half of their revenue through UK sales. The loans will convert to equity if not repaid.

The government will amend the rules of the Enterprise Investment Scheme, which provides tax relief to investors in high growth firms, to protect Future Fund investors from losing relief on their previous investments made prior to any investment through the Future Fund.

Match fund investors will also be encouraged to sign the Treasury’s Investing in Women Code, which commits firms to improving female entrepreneurs’ access to tools, resources and finance. The Future Fund is a signatory of this.

Companies can check they meet the criteria for funding by going to the British Business Bank website. If they have secured private match funding, one of their investors can register online to start the application process.

UK Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme (CBILS) will ensure financial support to smaller businesses (SMEs) that are continuing to lose revenue as a result of the pandemic, and will be extended until November 30, 2020.

British Business Bank will operate CBILS via its accredited lenders. There are over 100 of these lenders currently working to provide finance which include high-street banks, challenger banks, asset-based lenders and smaller specialist local lenders.

A lender can provide up to £5 million in the form of term loans, overdrafts, invoice finance or asset finance, with CBILS giving the lender a government-backed guarantee for the loan repayments.

It’s vitally important to remember that the borrower remains fully liable for the debt.

Personal guarantees will not be taken for facilities below £250,000, though they may still be required, at a lender’s discretion, for amounts above that.

However, a Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility, and recoveries are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.

Who is it for?

Access to the scheme has been opened up to many smaller businesses, some of whom would’ve previously met the requirements for a commercial facility but would not have been eligible for CBILS.

What this does is significantly increases the number of businesses eligible for the scheme.

Bounce Back Loan Scheme

The Bounce Back Loan Scheme (BBLS), extended to November 30, is a scheme that is a part of a wider package of government support for UK businesses and employees and is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website.

A lender can provide a six-year term loan from £2,000 up to 25% of a business’ turnover. The maximum loan amount is £50,000.

The scheme gives the lender a full (100%) government-backed guarantee against the outstanding balance of the facility (both capital and interest).

The borrower always remains fully liable for the debt.

Who is it for?

BBLS provides financial support to businesses across the UK who continue to experience disruption to their business because of the pandemic, and who can benefit from £50,000 or less in finance.

Resilience and Recovery Loan Fund

The Resilience & Recovery Loan Fund (RRLF) is a fund for social enterprises and charities who continue to experience disruption to their business model because of the pandemic, and applications close on Friday, November 13.

It’s being run by Social Investment Business (SIB) with an initial £25m investment and support from Big Society Capital, and has been established to make an existing government scheme – the Coronavirus Business Interruption Loan Scheme (CBILS) – more easily accessible to charities and social enterprises.

Eligible applicants will have been operating for a minimum of two years and have a minimum turnover of £400k. Further, they must trade in the UK as the loan will be used to support trading in the UK, be able to confirm that the organisation has been adversely impacted by COVID-19, and be able to demonstrate that outcomes of the product or services provided are specifically relevant to improving people’s lives.

The RRLF is a loan, and companies may be approved for it without any grant award alongside it.

Grants will only be awarded if it’s clear that the interruption to their business caused by the pandemic means that they would struggle to meet a viability threshold for a loan without the grant.

Who is it for?

This fund is only for social sector organisations such as charities, community interest companies and community benefit societies.

Many charities and social enterprises have been affected by the current crisis and lockdown. They’ve lost income but this fund won’t work for everyone. RRLF is intended for those organisations who face a problem because expected income and activity has been delayed or disrupted. A loan may help with this, providing working capital until normal business can commence again.

The RRLF can make loans alongside other lenders or grant providers, but consideration will be given on how the overall investment will affect an organisations financial position and its ability to repay.

Capability and Innovation Fund

There is £425m worth of funding available for Banks and Fintechs through the RBS-funded remedy package. Of this, £65m has been directly earmarked for the most innovative in the UK Banking sector, namely Fintechs (through Pools C and D).

The remaining £360m is split between two pools with criteria aimed at Challenger Banks who have announced that they will launch Business Current Accounts.

The Capability and Innovation Fund represents a large amount of (mostly) taxpayer money that must be carefully administered to achieve better outcomes for UK SMEs, and since the initial appointments of industry experts to the body administering the funds (BCR), there have been a number of delays.

The delays relate to the opening of the application process for Pool A onwards, along with the announcement of winning applications..

Challenger Banks and Fintechs can help their own causes through positive partnerships and PR associated with making an application.

Starling, Monzo and Tide and Revolut are eye-catching because of the number of partnerships they create to maximise ease of use and utility. Other Challengers will need to up their own collaboration with Fintechs to follow suit.

Applicants do not need to meet criteria such as having a Banking license to apply for Pools C and D, but this does not rule out a means of growing their business and delivering better outcomes from Pools A and B.

Who is it for?

Fintechs need not solely apply to pools they are eligible for but could approach Challengers to assess whether there is another potential fit. This has a double benefit of Banks securing innovations sooner that they would have previously, with Fintechs being able to enhance sooner as a result.

While the prospect of winning a sizeable level of funding or partnerships with Challengers are considerable rewards in themselves, there are additional benefits that will ensure that Fintech’s who apply will end the process in a better shape than when they started.

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