Joanne Price, senior manager at specialist business advisory firm FRP, explores the options available for financing business recovery.

Throughout the pandemic, the government has provided businesses with support through a range of relief efforts that have helped mitigate financial challenges.

Since the first lockdown alone, more than £75 billion in funding has been approved for UK businesses through three primary COVID-19 support schemes, including the Coronavirus Business Interruption Loan Scheme, Bounce Back Loan Scheme and Coronavirus Large Business Interruption Loan Scheme.

Business activity has been significantly impacted by the current climate and this government-backed funding has proven to be a crucial support for many firms.

However, as lockdown restrictions have been reduced, so too has the financial support available to businesses, with a raft of schemes set to end in the coming months - including the extended Job Retention Scheme.

A significant amount of debt has been accumulated through these state guaranteed loans and the impact of this in relation to further financial difficulties among local businesses is yet to be seen.

The recent economic outlook by the International Monetary Fund (IMF) was encouraging, with UK growth for 2021 forecasted to increase by 7pc, but even those that are beginning to see growth could soon find that the extent of the government intervention provided to them may lead to challenges in the future.

For example, new documentary conditions may limit opportunities to invest in a business until government-backed facilities are paid back. As a result, we may begin to see the need arise for different types of capital coming into businesses.

East Anglian Daily Times: Businesses should be ready to adapt and seek advice from someone who knows the marketBusinesses should be ready to adapt and seek advice from someone who knows the market (Image: FRP)

However, liquidity in the market remains strong, with a diverse set of credit investors seeking returns. This news comes from various sources, but mainly institutional private equity capital - a trend that we’ve seen accelerate over the past five years.

While traditional bank financing still has a key role to play, and was critical during the onset of the pandemic, engaging with alternative debt providers and private equity lenders will also be beneficial. These are generally nimble, entrepreneurial firms with a higher tolerance to risk and the appetite to fund businesses, albeit at a higher price point.

Credit is available, but it may not be through the traditional routes, so businesses should be ready to adapt and seek advice from someone who knows the market.

For more information, contact Joanne Price at Joanne.price@frpadvisory.com or 01603 703173.