My business is losing money – what options do I have?

Business is failing since Covid-19 – cash flow and company options

Even though the economy has reopened and the business world is operating with few restrictions, the coronavirus pandemic continues to take a heavy toll. The end of the furlough scheme and other government support is compounding financial problems for many firms.

Businesses that were once thriving are facing serious financial difficulty or even closure, so if your business is losing money, what can you do? If you believe your company is insolvent it’s crucial to stop trading and seek support from licensed insolvency practitioners (IPs), as there may be other options available.

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Consider additional funding

The Recovery Loan Scheme

Although the initial coronavirus loan schemes are now closed, the Recovery Loan Scheme may provide the additional funding your business needs to survive. The scheme is open until 31st December 2021, and businesses of any size can apply if they’ve been affected by coronavirus. Funding of up to £10 million is available in the form of asset finance, invoice finance, bank overdrafts, or term loans.

Pay As You Grow

If you’re struggling to keep up with repayments on a Bounce Back Loan, Pay As You Grow can help you spread the payments over 10 years rather than six years. It also offers additional flexibility in the form of interest-only payments and payment holidays. This may reduce the pressure on cash flow, and prevent the business losing more money.

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HMRC Time to Pay (TTP)

Maybe you’ve fallen into arrears with your tax liabilities? If so, HMRC operates a scheme that offers extra time to pay your tax arrears if the business is experiencing short-term cash flow issues.

Their Time to Pay arrangement typically allows a business 3-6 months to repay arrears, but a longer period may be negotiable. A TTP offers you breathing space from HMRC pressure and penalties, and stabilises your cash flow.

Company restructuring

It may be possible to formally restructure your business debts via a Company Voluntary Arrangement (CVA). This would enable you to continue trading, but also repay creditors a proportion of their debt over a longer period of time.

CVAs are suitable for businesses with predictable cash flows. Their success depends on long-term viability, so if the insolvency practitioner believes your financial situation is temporary, this may be a good solution.

Company administration

Company administration can be a potential option for companies in serious financial distress, particularly if creditor legal action is being threatened. It protects from enforced liquidation, and offers some breathing space to develop a plan.

Various outcomes are possible with this route. Companies are sometimes sold out of administration if the circumstances are favourable for a sale, whereas others benefit from restructuring their assets and/or debts.

Creditors’ Voluntary Liquidation (CVL)

If your business continues to lose money, and rescue isn’t possible, Creditors’ Voluntary Liquidation helps you to meet your legal obligations as the director of an insolvent company.

Your business assets are sold for the benefit of creditors, and the company ultimately closes down, but as long as no misconduct is found you’re free to move on to other ventures. You may also qualify for director redundancy pay and other statutory entitlements. Read more on our page to understand your eligibility for director redundancy pay. 

If your business is losing money you should obtain guidance from a licensed IP at the earliest opportunity. Any delay can severely reduce the options available to you, and could even lead to personal liability if you continue to trade whilst insolvent.

Real Business Rescue are insolvency specialists and will provide the trustworthy, independent advice you need. Please get in touch with our expert team – we offer free, same-day consultations and work from a wide network of offices around the UK.