Financing, post-brexit

It's Not All Doom and Gloom..

With the results of the UK's referendum showing a clear 'leave' victory, many UK businesses are now feeling quite rightly 'in the dark' about their futures. In particular, those who rely on the EU for trade, business to business contracts and particularly funding are concerned about how a 'post Brexit' Britain will pan out for the average small to medium sized business. Companies such as Fast Invoice Finance (www.fastinvoicefinance.com) are seeing a huge upsurge in enquiries. However, whilst there are uncertainties, there are still avenues for continuation of business and even development.

It is important for business to remember, for instance, that no trade deals have been severed or planned for renegotiation. With British businesses exporting more than they import (both physically and digitally), the fact remains that the EU needs Britain in its life. For many businesses, the next few months really should be 'business as usual' until Article 50 is invoked. This 'sit and wait' method might be uncomfortable, but it is by far the safest method for now. Changing business practices in anticipation may prove to be an unnecessary worry.

For those who really want to pre-emptively look at funding options, it is advisable to liaise with foreign institutions now if they provide funding for the UK based business. For instance, if a bank in Brussels provides some kind of banking for a business in London and is subject to an individual contractual agreement, it cannot hurt to set a new agreement in stone that protects the UK business against any financial damage it is anticipating. The Week reported that the pound is now at a 31 year low against the dollar.

Exchange rates have swiftly become a talking point for many UK businesses; with the pound already hit in February by Brexit speculation, it has started to dive further following the news of the UK's planned exit. One of the ways that UK businesses can secure funds and not lose out courtesy of the world exchange is to continue trading in Euros, but leave these funds in their country of origin to be used for purchases on the continent. The EU is subject to stringent financial regulations, so in many respects, funds retained in the EU will actually be safer than British pounds.

For those businesses wishing to continue finding funding from within the EU, Clearview Intelligence predicts that up to 15% of grant funding may be unavailable post-Brexit. This includes innovation and development funding; this does mean that businesses will have to look inward for funding. Companies such as Zopa, Fundingcircle and Fundingtree have all promised to continue funding to UK businesses at lower than average rates, which is sure to be a real lifesaver for any SME. So whilst external sources may look like a no go, the UK may still be able to offer financial assistance to its own businesses.

Whilst there are uncertain times ahead for the UK business, it's important to remember that every day is bringing new highs and lows for post-Brexit Britain. No changes have been put on paper yet and the average business would be wise to continue as normal; however, as far as future funding is concerned, unconventional methods may turn out to be the best option to secure funding from within the UK.