Tag Archive for Financing

One third of small businesses turn to Bank of Mum and Dad

Originally written by Timothy Adler on Small Business
One third of small businesses have turned to the Bank of Mum and Dad to help them get through the Covid crisis.
Faced with an emergency, more small business owners to turn to family ahead of banks for financial help. Forty-six per cent turn to family during the crisis compared to 40 per cent who turn to banks, according to a Liberis survey.
And over a third (35 per cent) said they turn to the Bank of Mum and Dad specifically, while one in five (19 per cent) said they turned to close friends.
>See also: Small businesses selling into EU face £180m in extra red tape costs
Four out of five small businesses have needed financial support during Covid – an estimated 4.9m of the country’s 6m SMEs — and over three quarters have sought commercial financing.
More than a third (37 per cent) of small business owners have taken on a second job to keep their businesses afloat, and more than a quarter (28 per cent) have considered doing this.
Going without food
Alarmingly, 6 per cent of SMEs surveyed said they were saving money on food, eating less and, occasionally, skipping meals to try and save money

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One third of small businesses turn to Bank of Mum and Dad

Originally written by Timothy Adler on Small Business
One third of small businesses have turned to the Bank of Mum and Dad to help them get through the Covid crisis.
Faced with an emergency, more small business owners to turn to family ahead of banks for financial help. Forty-six per cent turn to family during the crisis compared to 40 per cent who turn to banks, according to a Liberis survey.
And over a third (35 per cent) said they turn to the Bank of Mum and Dad specifically, while one in five (19 per cent) said they turned to close friends.
>See also: Small businesses selling into EU face £180m in extra red tape costs
Four out of five small businesses have needed financial support during Covid – an estimated 4.9m of the country’s 6m SMEs — and over three quarters have sought commercial financing.
More than a third (37 per cent) of small business owners have taken on a second job to keep their businesses afloat, and more than a quarter (28 per cent) have considered doing this.
Going without food
Alarmingly, 6 per cent of SMEs surveyed said they were saving money on food, eating less and, occasionally, skipping meals to try and save money

Read more...

Covid debt drowning small businesses to the tune of £104bn

Originally written by Timothy Adler on Small Business
Bank lending to small businesses hit over £100bn last year as SMEs scrambled for Government-backed Covid debt facilities.
Overdraft applications flatlined, despite gross bank lending to SMEs rising by 82 per cent to £104bn.
Around 1.5m Bounce Back Loan and Coronavirus Business Interruption Loan Scheme Covid debt facilities had been approved by the end of 2020.
And nearly one third of businesses accessed grant funding last year, compared to just 2 per cent in 2019.
The pandemic has hit the smallest firms hardest, with 49 per cent of sole trader and self-employed businesses reporting a fall in turnover compared to 38 per cent of businesses with 50-249 employees.
Worryingly, despite the flood of cheap Government lending, one third of small businesses surveyed in the latest British Business Bank report expect to shrink.
Only one in five (21 per cent) were expecting to grow, compared with 28 per cent the previous year.
SMEs in business services (25 per cent) and production (23 per cent) sectors were most optimistic about their prospects for growth over the next year, with businesses in construction and other services sectors least optimistic (both 17 per cent).
Encouragingly, small businesses have amassed a war chest due to the

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Super-deduction tax break – what is it and how does it work?

Originally written by Timothy Adler on Small Business
What is the super-deduction tax?
The super-deduction £25bn tax break, announced in last Wednesday’s Budget, is intended to spur investment by providing 25p off company tax bills for every pound of qualifying spending on plant and machinery.
How the super-deduction works
The super-deduction offers 130 per cent first-year relief on qualifying main rate plant and machinery investments from April 1 2021 until March 31 2023 for companies.
For most business equipment, there will be a super-deduction of 130 per cent of the expenditure incurred. This will mean that on a spend of £100,000, the corporation tax deduction will be £130,000, giving corporation tax relief at 19 per cent on £130,000, which is £24,700.
Normally such expenditure would either fall within a company’s annual investment allowance and produce relief of only £19,000 or alternatively be tax-relieved at 18 per cent of the cost per annum.
Nigel May, partner at MHA MacIntyre Hudson, said: “Companies looking to use this relief will need to take care when the assets that the expenditure relates to are sold: tax charges may then arise clawing back the relief. It is perhaps worth noting that certain expenditure is excluded, in particular the acquisition of company cars.”
What

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Super-deduction tax break – what is it and how does it work?

Originally written by Timothy Adler on Small Business
What is the super-deduction tax?
The super-deduction £25bn tax break, announced in last Wednesday’s Budget, is intended to spur investment by providing 25p off company tax bills for every pound of qualifying spending on plant and machinery.
How the super-deduction works
The super-deduction offers 130 per cent first-year relief on qualifying main rate plant and machinery investments from April 1 2021 until March 31 2023 for companies.
For most business equipment, there will be a super-deduction of 130 per cent of the expenditure incurred. This will mean that on a spend of £100,000, the corporation tax deduction will be £130,000, giving corporation tax relief at 19 per cent on £130,000, which is £24,700.
Normally such expenditure would either fall within a company’s annual investment allowance and produce relief of only £19,000 or alternatively be tax-relieved at 18 per cent of the cost per annum.
Nigel May, partner at MHA MacIntyre Hudson, said: “Companies looking to use this relief will need to take care when the assets that the expenditure relates to are sold: tax charges may then arise clawing back the relief. It is perhaps worth noting that certain expenditure is excluded, in particular the acquisition of company cars.”
What

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Small business should get HMRC refund to cover Covid losses, say MPs

Originally written by Timothy Adler on Small Business
Small business and the self-employed should get a tax refund to cover their Covid losses, an influential Treasury select committee has recommended.
Under a “loss carry-back” scheme, any business, whether it’s a limited company or a sole trader, would get a cheque back from HMRC reimbursing them for Covid losses, providing they paid tax in Britain for three years before the pandemic.
A similar policy was adopted during economic crises in 1991 and 2008.
>See also: Restart Grant for your small business – what is it and where to claim
The Government should also look favourably on a further extension of the Annual Investment Allowance – which provides tax relief for expenditure on most plant and machinery – and possibly keep it permanent at the current level.
In its Tax After Coronavirus report, the select committee says that now is not the time for tax rises or clawing money back post pandemic. That said, significant fiscal measures, including revenue raising, will possibly be needed in the future, MPs said.
A moderate increase in corporation tax could raise revenue without damaging growth, the committee agreed.
Rishi Sunak is reportedly going to announce a stepped increase in corporation tax from 19 per

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Microbusiness £50,000 Bounce Back Loans – how they work

Originally written by Timothy Adler on Small Business
UPDATED: The chancellor is extending the repayment period on Bounce Back Loans for 1.4m small businesses.
Small firms will have ten years to repay instead of the previous six years, as announced by Sunak in September 2020. Interest on extended loans will be at a fixed rate of 2.5 per cent.
Businesses can also choose to make interest-only payments for six months (this option is available up to three times on the length of the loan) or pause repayments for up to six months (this option is only available once).
Lenders will start communicating these options to customers three months before repayments begin and advise them on how each option may affect their payment profile. They contact customers directly so there’s no need to get in touch with them.
The Bank of England’s regulation chief is warning that half of Bounce Back Loans will go sour.
What’s more, figures from the Office of National Statistics show that 14 per cent of businesses think they have little or no chance of surviving the next three months.
Last year, the government extended the application for Bounce Back Loans until the end of March 2021. Previously, the loan deadline was extended to January

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Government plans permanent state-backed small business loan scheme

Originally written by Timothy Adler on Small Business
The government is planning to replace existing coronavirus business support with a permanent state-backed small business loan scheme.
Under the plan, which would be launched in January, the government would guarantee 80 per cent of loans to small businesses, ranging from a few thousand pounds up to £10m per company over a six-year lending period.
In effect, the new state-backed SME loan scheme would extend the Coronavirus Business Interruption Loan Scheme (CBILS) but with a lower threshold. The minimum CBILS loan is £10,000.
>See also: Treasury eyes hitting self-employed gig workers with VAT charge
According to the Financial Times, the banks would set their own interest rate for their loans, but the rate is likely to be capped at about 15 per cent – just like the CBILS – which is far higher than the 2.5 per cent fixed interest rate of the parallel Bounce Back Loans Scheme (BBLS).
Research by our sister title GrowthBusiness found that lenders are charging anything between 3 per cent and 15 per cent for CBILS loans.
As of last month, the CBILS and the BBLS have lent £60.64bn to struggling businesses between them.
And the new state-backed SME lending scheme would have more stringent

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Government plans permanent state-backed small business loan scheme

Originally written by Timothy Adler on Small Business
The government is planning to replace existing coronavirus business support with a permanent state-backed small business loan scheme.
Under the plan, which would be launched in January, the government would guarantee 80 per cent of loans to small businesses, ranging from a few thousand pounds up to £10m per company over a six-year lending period.
In effect, the new state-backed SME loan scheme would extend the Coronavirus Business Interruption Loan Scheme (CBILS) but with a lower threshold. The minimum CBILS loan is £10,000.
>See also: Treasury eyes hitting self-employed gig workers with VAT charge
According to the Financial Times, the banks would set their own interest rate for their loans, but the rate is likely to be capped at about 15 per cent – just like the CBILS – which is far higher than the 2.5 per cent fixed interest rate of the parallel Bounce Back Loans Scheme (BBLS).
Research by our sister title GrowthBusiness found that lenders are charging anything between 3 per cent and 15 per cent for CBILS loans.
As of last month, the CBILS and the BBLS have lent £60.64bn to struggling businesses between them.
And the new state-backed SME lending scheme would have more stringent

Read more...

MarketFinance offers small business grants of £5,000 each

Originally written by Timothy Adler on Small Business
MarketFinance, the fintech business lender, is offering grants of £5,000 to support small businesses.
Businesses have until December 31 to apply for grants through the MarketFinance Business Booster Fund.
Three businesses will be selected and announced on January 6.
Timings of subsequent rounds will be confirmed in 2021.
>See also: Treasury to discuss COVID-19 grant for company directors
Any business in any sector can apply, so long as it has been trading for at least two years and is showing positive growth. It is not necessary to be an existing customer of MarketFinance to be eligible for the grant.
MarketFinance, which has offices in London and Manchester, is especially keen to support entrepreneurs who value diversity, inclusion and giving back.
Since 2011, MarketFinance has advanced over £3bn to companies across a range of sizes and sectors, providing working capital and finance for everything from paying staff and suppliers to launching new products or services and accelerating growth.
MarketFinance is backed by Barclays, Santander InnoVentures, European venture capital fund Northzone (whose investments include Klarna, iZettle and Trustpilot) and private equity group MCI Capital (also invested in iZettle, Azimo and Gett).
>See also: Liverpool launches £9.5m grant fund for ‘excluded’ self-employed
Anil Stocker, CEO of

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