Hurricane Matthew recently caused chaos along Florida’s coastline, and highlighted the fact that businesses can suffer losses through circumstances outside of their control. Luckily, according to an October 2016 ActionNewsJax.com article, The Florida state authority’s response to the disaster was to provide short-term bridging loans of up to $25,000 to affected businesses to enable them to get up and running again.
Cissy Proctor, the director of the Florida Department of Economic Opportunity said:
“As the backbone of Florida’s economy, we know that assisting small businesses with their recovery is an important step in restoring our communities.”
Last year in Britain, many retail businesses in the Yorkshire town of Hebden Bridge temporarily closed because of flooding. Though business received local authority grants for immediate repair work (as reported on Calderdale Council’s website in December 2015), many took months to re-open.
What these two incidents illustrate is how unforeseen circumstances can affect a business’ cash flow. Fortunately for many businesses, cash flow decreases can be forecast. Many businesses have peak and low-income periods. For example, if a company makes fireworks, then their peak season is November and New Year, with lower sales likely in the summer. An ice-cream seller, meanwhile, will sell more of their products during the hot summer months. Elsewhere, many retailers enjoy their best trading period leading up to Christmas.
Businesses that know their income will rise after a temporary dip can use short-term bridging loans so that they can continue to meet their liabilities when cash flow is low. Bridging finance can also be used for property refurbishment, stock purchases and relocating.