Business finance: My business needs a cash boost - should I get a loan or a grant?

Kelly-Anne Byres, who runs East Anglian accountancy firm KBL, compares the options for those in a ca

Kelly-Anne Byres, who runs East Anglian accountancy firm KBL, compares the options for those in a cash flow crisis.Picture: KBL/Getty - Credit: KBL/Getty

Kelly-Anne Byres, who runs East Anglian accountancy firm KBL, compares the options for those in a cash flow crisis.

Trust me, I get it.

You are working your socks off but, despite sending out a load of invoices, the cash isn’t coming in.

As we are all aware, there has been a raft of support measures offered to businesses in the last week including state-backed loans and a selection of grants.

But which should you go for?


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Well, the idea behind the loans is to support businesses that need urgent access to cash, such as to pay landlords and suppliers.

Only firms able to demonstrate they were in sound financial health before the virus struck will be eligible.

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For smaller firms, the chancellor said he would expand the business interruption loan scheme to offer firms up to £5m of loans with no interest due for the first six months, up from a previous proposal of just £1.2m.

What about grants then?

The government has said that all small companies occupying business premises with a rateable value of between £15,000 and £51,000 will be eligible for grants worth £25,000.

Britain’s smallest 700,000 businesses – across all sectors of the economy – will also be eligible for cash grants of £10,000.

So which do you go for?

At this stage, we would urge caution on taking any business loans unless you absolutely have to.

They are likely to be low interest to begin with but that money will need to be clawed back somehow– and this might include hefty interest rises later down the line.

Grants however are a great idea – and we would urge all eligible businesses to apply even if they don’t need help immediately.

After all, you might kick yourself later when the struggle doesn’t vanish alongside the virus and the grants are no longer on offer.

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