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Can A Business Grant Or Loan Keep You Afloat?

Seeking a business grant or loan to stay afloat has become a top priority for SMEs across the globe in the wake of the coronavirus pandemic.

With many business’s cash flow forecasts indicating worrying cash gaps ahead, business owners are exploring their options to inject a much-needed cash boost into their companies in the form of a business grant or a loan.

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Business grants

If you’re considering applying for a grant or a loan, chances are a grant would be your first choice – as you don’t have to pay the money back.

Receiving a business grant can be a huge relief and give your business the vital cash flow boost it needs. A grant could be the key to keeping your premises or paying your staff through tough economic times.

However, there are a couple of elements to consider when applying for a grant.

Firstly, the period of time between applying and when the business grant will actually be paid can vary, and it can sometimes take a while for the money to come through. So if your cash flow forecast is flagging potential shortfalls ahead, it’s best to act quickly.

Applying for a grant can also be time-consuming. At a time when businesses are scrambling to get back to a ‘new normal’ post-lockdown, do you have the time to set aside for the grant application process? Also your business will have to meet a certain set of criteria to qualify for the financial support, and you may be required to match the amount invested in your business too.

If you have already applied for a grant – perhaps a couple of months ago at the start of the pandemic – you can potentially apply for a business grant top up. This depends on the type of grant your business is eligible for, but if you already have a grant application under your belt don’t let it put you off if you need to apply for more support.

Finally, you’ll want to consider if your business grant will be taxed and the implications of this on your future cash flow. Often business support grants are taxable, and your accountant should be able to advise you on this. It’s also important to consider the VAT implications. In the UK, grants normally fall outside the scope of VAT, however this is also worth discussing one on one with your accountant.

Governments across the world are offering business grants to help support businesses through the current economic climate. Usually you can find more information on these grants through your local council, but you can also see our list at the end of this article to find out which organisation to contact to find out what small business grants are available in your region.

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Business loans

If you need a quick cash injection and your business doesn’t qualify for any grants, another option is a business loan. Getting approved for a business loan tends to be much faster than getting a grant, and in some cases the money can be in your business account within days.
The downside of a loan is, of course, that eventually you’ll need to pay the money back – often with added interest – within a set timescale.

With a loan businesses can borrow anything from £1,000 to £3 million, and will pay it back over a period of 1 month to 15 years. Loans can be either secured or unsecured, meaning you might use business assets (such as stock or machinery) to secure the loan so the lender can get their money back if you cannot repay it.

There are different types of loan, including cash advance loans and loans for startups. Recently, new loans to help businesses combat financial pressures resulting from the coronavirus pandemic have been introduced too. One example is the UK’s Bounce Back Loan Scheme which allows small businesses to access loans of up to £50,000, borrowing for 6-years with no repayments due in the first 12 months.

It’s important to talk to your accountant about your options and weigh up the benefit of receiving money now, versus having to pay it back in the long run. Your cash flow forecast can help you factor in the future repayments and decide whether getting a loan is right for your business.

What can business grants and loans be used for?

Business loans and grants can be used in a number of ways to support your business. While grants often come with more restrictions around what you can and cannot spend the money on, loans can be a little more flexible.

Amongst other things, grants and loans may be used for:

  • Paying employees
  • Paying sick pay
  • Paying tax
  • Covering business running costs such as rent and bills
  • Buying new equipment or technology
  • Buying stock
  • Advertising and marketing
  • Getting professional advice and expert input

Where to get a business grant or loan

If you’d like to know more about what loans or grants are available to your business, here’s a list of some of the main starting points for finding out your options.

UK

The UK Government has launched a number of schemes throughout the coronavirus pandemic, available to support businesses up and down the UK.

These include:
Coronavirus Business Interruption Loan Scheme (CBILS)
Coronavirus Future Fund
Bounce Back Loan Scheme (BBLS)
Coronavirus Small Business Grant Fund
Retail, Hospitality and Leisure Grant Fund
Local Authority Discretionary Grants Fund

You can find out about these and more via the Government’s Finance and Support Loan Finder >

England

A £20 million pot of new funding has been made available to SMEs in England. The government funding will see businesses receiving grants of up to £5,000 to help them adopt new technologies (like Float!) via 38 regional Growth Hubs, which are part of the Local Enterprise Partnerships Network.

“Businesses will be able to use these new grants to pay for the expertise, equipment and technology they need to adapt, recover and rebuild,” said Minister for Regional Growth and Local Government, Simon Clark.

Scotland

Scottish Enterprise, the Scottish Government’s business support arm, is offering information on a range of funding opportunities including grants, loans and accelerators for businesses.

You can find more information on the Find Business Support website.

Northern Ireland

The Northern Ireland business support finder offers a searchable database of financial assistance available to businesses.

Wales

Business Wales is where the Welsh Government offers information on financial support, loans and grants for businesses.

EU

Information on financial opportunities available to businesses in the EU can be found here. This includes information on the European Investment Fund, Creative Europe and the COSME Programme.

Australia

Search for business funding, loans and grants for Australian businesses via this portal.

The Aboriginal Business Development Program is specifically available for indigenous people based in the Northern Territory.

New Zealand

Check out the New Zealand Government website for information on available grants and loans, including Māori Business Growth Support.

USA

The US Small Business Administration has details on coronavirus relief options, including Economic Injury Disaster Loans (EIDL) and SBA Express Bridge Loans.

Canada

This grants and funding finder can help you find out which financial support Canadian businesses can access.

Remember to take a look at our COVID-19 Support Hub to find out how to use cash flow forecasting to navigate your business through the uncertainty of the next few months.

Further reading:

5 Most Common Reasons Businesses Seek Funding

Louise Bayley-Boyd

Content Manager and digital enthusiast, fuelled by coffee and horror films.