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How to maximise your return on a Government Bounce Back or CBILS Loan

If you have received a Government Bounce Back loan or Coronavirus Business Interruption Loan Scheme (CBILS) loan, schemes that were introduced to help smaller businesses impacted by Coronavirus (COVID-19), then there are important steps to follow in order to ensure you maximise your return on these finance facilities.

What to do next? Government CBILS and Bounce Back Loans may be considered the cheapest money in a generation, which may make it tempting to pay off debt and other finances. However, having worked with numerous businesses in our years of experience, we would suggest that there are smarter, alternative ways to use that valuable facility, giving your business stability and potential to grow.

By maximising the returns on your finance facilities, you can: * Support your cash flow * Stabilise your business * Invest long term in your business * Maximise tax position * Maximise business potential * Keep reserves for a rainy day

By using your finance facilities to invest in your business in the form of modern, state of the art equipment, using a leasing facility, asset finance or part-finance, you can maximise the potential of your business by keeping cash in the company, improving and enhancing cash flow whilst also providing the best service for your customers, clients and businesses you work with.

This is likely to help stabilise your

business in the long-term, by investing in new or better equipment, your business can be better at what it does, as opposed to using the funds to pay off debts or other finance, which may seem attractive in the short term, but might not help to increase sales, turnover and profit.

What should I use my CBILS or Bounce Back Loan for? Once you have successfully secured your loan, you should look at maintaining your cash flow whilst investing in areas of your business that are going to make it more successful going forward. If you need equipment which takes a chunk of cash from the business then finance and leasing is always a sensible option, and now more than ever with cash being its most valuable in your bank, keeping hold of reserves for a rainy day.

We’re happy to speak to any business about their finance needs, whether that be upgrading equipment, replacing equipment or purchasing brand new equipment, these options are second nature to us and always represent the sensible option for helping your business to grow.

Cash is king It is important to consider your options when it comes to retaining cash in the bank whilst also having the resources to make money and pay bills. We work with businesses to ensure they can do this, and there are many options to consider to retain cash in your business for a rainy day. By thinking long term, monitoring cash flow regularly and investing cash into the business, as opposed to using it all to pay bills or buying a large piece of equipment, you can ensure the company has room to manoeuvre and be flexible with cash.

Lease your equipment We recommend that businesses get the best, most up-to date equipment by leasing it. There are several advantages to leasing over buying your equipment outright, with cash flow being the main one. Leasing allows you to operate as a business by having the equipment you need to provide your customers with a service or product, whilst not over committing by spending a large sum of money and giving your business a potential cash flow issue. By leasing you pay regular monthly payments for the equipment which enable you to maintain capital whilst still being profitable, as well as great tax benefits.

Equipment finance In a similar vein, there are great benefits to equipment finance, in the long term there are clear payment options, and in the short term there are no large payments to be made, you can manage your cash flow and maximise revenue throughout the process. You can grow your business and plan your budgets with fixed repayments. The regular payments help to steady your cash flow, making it easier to plan. In addition, you can re-finance any existing assets to release equity into the firm, ensuring a good injection of cash, supporting your cash flow and bringing you a needed boost without having to lose any equipment.

Cut costs It may seem like an obvious solution but cutting down on unnecessary costs will reduce expenditure and help with your cash flow. By separating the essentials from the surplus or excessive spending can go a long way. By focusing on recurring and important expenses there may be room to cut back, such as on overheads, utilities, or payroll. In addition, any services, leases, or loans that could be renegotiated are an obvious opportunity to cut expenditure.

We’re happy to speak to any business about their finance needs, whether that be upgrading equipment, replacing equipment or purchasing brand new equipment, these options are second nature to us and always represent the sensible option for helping your business to grow.

For further information please visit our website www.johnsonreed.co.uk, email info@johnsonreed.co.uk or call our team for a chat on 0161 429 6949