Funding amid COVID-19: alternatives to government support

1st Jul 2020
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By Damon Walford, CCO, Swoop

You’ll have read about the various measures the UK government has introduced to support businesses and sole traders struggling with the commercial and cash impacts of COVID-19. 

But what if these support measures don’t suit the shape of your client’s business? Perhaps, despite the pandemic, their turnover is taking a turn for the better or they’re looking to expand? Or you might have found out that they don’t qualify for schemes such as Coronavirus Business Interruption Loan Scheme (CBILS), or that £50,000 for a Bounce Back Loan isn’t enough? 

(See our summary of government support for businesses affected by COVID-19 here).

So what are the alternatives to the government’s COVID-19 support measures? I won’t talk about business VAT deferment, credit cards or business overdrafts here, as you’ll most likely have looked into these already for your clients. Instead, whether your clients are after growth or simple survival, I’ve compiled a list of ways in which you can help improve their cash flow and boost their working capital as the pandemic unfurls. 

I’m covering lending, equity and cost-cutting here. 

First, lending. Rather than taking out a straightforward working capital loan, your clients might benefit more from invoice finance (raising cash against invoices) or asset finance (e.g. leasing) facilities. If you have a client that is trading internationally you might also look at different types of trade finance to help them secure their supply chain or get paid earlier than they might otherwise. And if your client's revenue is looking good, but they can’t (or don’t want to) bag a loan, it might be worth considering a business cash advance. 

Second, your client might be in a position to attract equity investment. Investors are still looking for opportunities – and we’re currently working to get a number of our customers’ investor ready. 

And, third, I can’t write a blog about funding without highlighting ways that you can cut your clients’ everyday costs.

1. Lending alternatives to the government-backed funding schemes

Invoice finance  

If you have a client that has issued invoices to their customers and these haven’t yet been paid, invoice finance unlocks this money early. In other words, they borrow money against their unpaid invoices (accounts receivable). 

This might be helpful if, for example, they are taking on a large, new contract and want to finance a specific invoice (selective invoice finance). If the contract is with a new customer, their preference might be to outsource credit control to their invoice finance provider (factoring).

With all types of invoice finance, rather than waiting for your client’s invoices to be paid, a lender will advance most of the value immediately – so they’ll get paid faster for completed work. A lender typically advances up to 95% of the value of invoices, with most of the other 5% paid later. (There may be a small fee for the privilege).

Asset finance

Don’t buy it, lease it! If your client needs computers or other business equipment, have them consider leasing rather than using up their cash reserves. These lease costs can be expensed when calculating their business taxes. 

The question to ask your clients is: what has this enforced global experiment taught you about the way you and your employees work? More specifically, since we’re talking about finance here, what equipment do they need to buy in order to make their business more efficient and flexible longer-term, especially if a significant proportion of their workforce might be working from home and might need more than a laptop?

Your clients might also want to consider raising finance against the assets their business already owns – sweat your assets.

Trade finance loan

The twin challenges of Brexit and COVID-19 have made trading internationally rather more complicated. I’ve had a lot of conversations recently with business owners who rank securing their supply chain as their number one priority. This is where trade finance comes in. 

For example, if your client is dealing with international buyers and suppliers, a trade finance loan can give them the cash needed to buy inventory or stock from a supplier in order to fulfil an order. Let’s say you have a client who has a confirmed purchase order from a customer and wants to either import stock (or inventory), or export products for resale. A trade finance lender can pay their  supplier (in this case the exporter) before they (the importer) receive the goods. 

In addition to raising a loan against imports, your client might also want to discount the invoice and get paid early. 

Business cash advance

This could also be a good option if, for example, your client is confident about their turnover but is struggling to get a loan (perhaps because of a poor credit rating). 

A business cash advance is a type of lending that’s based on future revenue. You’ll also hear it referred to as a revenue loan, a turnover loan or revenue-based financing. It’s useful because the lender takes repayments as a proportion of your client's revenue. This means that when things are going well, your client can pay more back each month, but if their business is going through a lean period they pay a smaller amount. 

It’s worth noting that business cash advances are more expensive than bank loans. 

Working capital loan 

Over the past few months we’re seen demand both from businesses looking to invest or fund new contracts and from businesses who need short-term or medium-term loans to help meet their day-to-day operational needs (e.g. paying suppliers, creditors, rent, payroll) out of cash flow. 

We’re seeing a lot of demand in particular for unsecured loans in the £100,000 to £250,000 bracket – either CBILS or standard ones. Of course businesses stand a better chance of getting an unsecured loan if their business has a high credit rating, though they might be asked for a personal guarantee. Any lender will look at historical trading performance and the underlying viability and strength of the business pre-COVID. 

Read more about working capital loans here.

Revolving credit line

Your client might not need it right now, but a line of credit is an easy way to delay your client’s cash flow problems to give them a bit of headroom. Think of it as an insurance policy. They might be able to get a line of credit using their accounts receivable or their inventory as collateral.  One appeal is that they don’t have to commit to a loan, as you would with most of the government-backed lending such as like CBILS and BBLS.

Re-bridging loan

If your client is looking to refinance an existing bridging loan at a better interest rate, or if their existing bridging loan is coming to the end of its term, there are two options:

  • Remain with the existing lender i.e. arrange a loan extension. This could work out as more expensive, especially if you have to pay an extension or rearrangement fee.  Also the term may be much shorter than the original loan, so they might be in the same situation again before long…
  • Find an alternative lender. Moving the loan elsewhere could be a cheaper and better option in the longer term.

Regional loan funds

The amount of regional funding available from both European and UK government institutions remains the same and in some cases (e.g. the Northern Northern Powerhouse Investment Fund or NPIF) it’s actually increased during the pandemic. It’s worth looking at these funds, as well as regional growth funds and local enterprise partnerships.

R&D tax credit loans 

There are a growing number of finance providers who can advance funds to your client against their R&D tax credit claim. 

If they haven’t ever claimed R&D tax relief from HMRC, they might be eligible if they are planning to invest in technology and IT systems, new e-commerce websites or other new software. These all come under HMRC’s rather broad definition of “an advance in science or technology”. We’ve helped plenty of businesses claim R&D tax relief as a result of this tax incentive. And it is even possible to  claim on unsuccessful projects – or if their business is running at a loss.

The main benefit of an R&D tax credit loan is that you can usually access funds within a week of your first conversation with the lender. By contrast, if you were to wait for HMRC to pay your tax credit, it could take many months (or even a year). 

2. Equity investment

There’s no getting round the obvious impact of the pandemic on the world’s high-growth businesses and, more specifically, on the venture capital and private equity markets. But don’t think that COVID-19 has put the kibosh on all equity investments. It hasn’t – our team has seen growing investor interest in sectors such as EdTech or HealthTech in the UK, and the numbers show this is the same the world over. 

There are many upsides to selling a stake in your business, not least the additional skills, knowledge and contacts that private investors can bring to your clients’ businesses. Read more about the different types of equity finance here.

3. Make savings on your everyday costs

In the very short term (i.e. today) your clients can make savings across their cost base, e.g. in banking, foreign exchange, utilities, insurance and broadband costs. 

If you let Swoop help, we can match your clients to tailored funding and savings solutions. Simply integrate their bank account and you’ll receive an instant expenditure and savings report. Over the last 12 months we helped 2,582 businesses make total savings of £2,042,991 in bank switching, £611,956 in foreign exchange and £381,911 in utilities.

Here are our top three savings tips for your clients:

  • Open another bank account (multi-banking) - Consider opening an additional account and move the most expensive transactions to it. Some banks, for example, have specialist benefits for businesses that are more digital. It can be done quickly and you won’t miss a direct debit or standing order. (We save our customers on average £1,300 a year with changes to their banking.)
  • Change your international payments (foreign exchange) provider - If you do business overseas that involves sending money to (or receiving money from) foreign bank accounts, consider switching from your main bank to a different provider. Some offer different exchange rates and transfer fees, and in some cases the bank receiving money charges fees. Businesses who have switched their international payments from their main bank to a different provider have saved on average £8,000 over the 12 months with Swoop. Once you’re registered with us we can see whether your business can benefit from switching.
  • Change your energy supplier - We know that some energy suppliers still have excess supply after the mild winter, so now is a good time for businesses to review providers. Swoop can look at your energy bills and bank accounts, put a figure on potential savings, and help you switch provider.


This is a lot of information to digest. The main message is: if you want your client’s business to thrive – rather than just survive – as we emerge from this pandemic, or if your client is not (for whatever reason) taking advantage of the various government schemes, there are plenty of alternative funding options out there. Whether they need to secure their supply chain, reduce international trading risk, enter new markets, cushion their working capital or invest in growth, you can most likely find the right funding for your client’s business. Especially if you let us help.

And if you’d like Swoop to help you identify possible sources of funding and savings for your clients, we can easily integrate with their accounting software. This simplifies – and speeds up – any applications you make.

Don’t waste time - there are plenty of funding and saving solutions to help your client’s business grow. To immediately access the services detailed above, and more, click here.