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Brexit uncertainty feeds finance needs

Government and financiers are urging businesses to prepare for disruption and uncertainty as the Brexit transition period draws to an end.

16th Nov 2020
Freelance Journalist
In association with
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Brexit uncertainties increase need for finance
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The chance of a free trade deal between the UK and EU is hanging in the balance. With a December deadline looming, the two sides are still debating issues such as state aid and fisheries.

Coming on the heels of coronavirus-induced lockdowns and restrictions, Brexit uncertainty poses a major threat to the entire UK economy. The next few months are going to require extra ingenuity and resources for business owners to keep their enterprises running.

Favourable lending environment

According to Andrea Reynolds, founder and CEO of small business online finance specialist Swoop, this means firms are going to need to be proactive and take advantage of the current lending environment.

“It’s generally favourable to SMEs at the moment so this is a good time to build up working capital if needed,” she advised.

With 159,277 CBILS applications valued at £17.16bn as of 22 October, many businesses appear to be heeding Reynolds’ advice. Small businesses can apply for CBILS loans if they employ 50 or fewer people and turn over less than £9m a year. The £50,000 Bounce Back Loans for smaller businesses that come with fewer conditions are harder to come by now, but as the second lockdown came into force this month Chancellor Rushi Sunak extended the application period for CBILS loans through to the end of January 2021.

Alternative routes to finance

Other sources of finance are also available. For Reynolds, taking advantage of all the options is part of good portfolio management. This discipline starts with effective cash flow analysis and assessment of trading partners’ credit ratings and should move from there to a better understanding of where improvements could be made.

One way to take risk out of tricky trading situations is invoice insurance, which will cover 90% of the outstanding amounts if a customer goes into administration and is unable to pay.

Companies that trade internationally should also open a multi-currency business bank account that allows users to hold multiple currencies in the same account, saving them unnecessary foreign exchange fees.

With Brexit and coronavirus contributing to further uncertainty, specialist currency providers can also help hedge against swinging exchange rates through methods like forward contracts, that can fix an exchange rate for up to two years.

Government guidance

Whether or not they turn to financial solutions, business owners can turn to the government’s Brexit checklist for tailored advice. The government has also published a pamphlet for EU businesses who trade with the UK, as well as advice for importers, exporters and travellers bound for EU countries.

AccountingWEB is also publishing a regular series of Brace for Brexit articles explaining how different elements of the VAT and customs duties regime will operate after 31 December.

With so little time left, it’s vital to act now to ensure that your business survives and thrives in 2021.

To find out more about Swoop and the finance options available to your clients, contact their dedicated advisor team to book a free consultation. 

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