Business Funding in a Post-Covid Environment

1st May 2020

The scale and breadth of the government’s Covid business support has been unprecedented and runs into several hundred billions of pounds. Undoubtedly, this action has saved thousands of businesses from ruin and has given a degree of optimism for many that a return to a new normal is possible. Details of the numerous support mechanisms can be found on our Coronavirus Knowledge Hub.

In this insight we summarise some alternative sources of funding for businesses to consider in the post-Covid phase of opening the economy back up.

In addition to traditional forms of bank loan and asset lending, the government guaranteed Business Bounce Back Loan Scheme, CBILS and CLBILS are still available from over 40 lenders. These schemes contain not just government guarantees to the lenders but assist the borrower with deferred interest and repayment holidays, as well as limited or nil personal guarantees.

Whilst these schemes are a crucial source of funding, businesses will still need to prepare a considered funding application. Having an up to date business plan, management accounts and cash flow forecasts available will all be critical to securing appropriate funding for your business. 

The availability of grant funding can depend to a large degree on your geographical location, particularly where certain regions have benefitted from EU funding. Whilst we are moving towards Brexit at the end of 2020, most EU funding streams will still be available until 2022. These grant schemes take many forms, from subsidised business advisory and mentoring, to cash grants for equipment. Details can be found at your Local Enterprise Partnership Growth Hub.

Innovation Grants
Innovate UK (part of UK Research & Innovation) runs an array of grant funding competitions. Its Smart Grant programme considers eligible costs ranging from £25,000 to £2.0m, depending on the duration of the project (6-36 months). Projects must be UK-based and include at least one SME.

Intervention rates vary depending on size of applicant and the type of R&D involved. The current Smart Grant competition provides funding for innovative R&D from feasibility (including market research), through to technology or prototype testing and development stages up to (but not including) commercialisation.

Details of the current round of grants, loans and competitions can be found here.

R&D Tax Credits
If your business is being innovative by improving processes, increasing efficiencies or bringing new products and services to the market, then you may be eligible to claim R&D Tax relief. 

Research & Development (R&D) Tax relief is an incentive available to UK limited companies to boost investment in UK innovation. It is currently one of the most lucrative forms of tax relief available to SMEs and can generate game changing sums of money for UK businesses. Our team of R&D Tax experts can help assess your eligibility, as well as assist in the claims process.

Equity fundraising can be appropriate for both early stage and mature companies looking for growth/development capital or looking to reduce debt levels. Equity investors could include Venture Capital & Private Equity firms, High Net Worth Individuals or Corporates. State funded initiatives such as the Midlands Engine Investment Fund are also potential sources of equity investment. In the immediate short-term, the appetite for trade buyers is likely to be diminished as the majority focus on their own business and preserving cash through the pandemic. Private Equity and Venture Capital firms however still have funds to deploy and are expected to be active in the market from Q3 2020 onwards.

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) is a great way for growing companies to raise finance, making the business an attractive proposition for investors because of the generous tax breaks on offer. Bishop Fleming has considerable experience of helping companies to raise finance and to qualify for the scheme, as well as advising potential investors on the options available. 

Bishop Fleming has a team of fundraising specialists ready to advise clients through the different phases of the Coronavirus. As a partner of Capitalise, we have access to 100+ lenders to provide businesses with the opportunity to secure the right kind of funding. Our Capitalise team will support you through all stages of the funding process. Find out more about raising finance through Capitalise here.


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