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Introduction
NatWest has released a report titled: Key strategies to managing working capital in 2025 to help UK businesses manage their cash flow in times where economic volatility caused by international events and other domestic factors can have unexpected impact on working capital. Sudden changes to market conditions can lead to businesses lacking working capital if they have not planned ahead and face higher costs or disruption.
The report advises businesses to take steps to manage and potentially increase overall working capital available in order to mitigate risks such as unpredictable market conditions that can cause supply chain disruption and rising inflation which pushes up overall operating costs.
Issue 1: Dealing with Supply Chain Disruption
In the case of the risk to cash flow associated with volatile market conditions, there can be supply chain disruptions within any industry at short notice. This can include delays to shipping, regular suppliers not being able to fulfil orders or sudden price hikes that can lead to businesses incorrectly planning ahead and therefore impacting on available working capital. Some of the supply chain issues that can affect working capital are outlined below:
i) Overstocking – Some businesses buy in too much stock to try and manage risk of supply chain uncertainty and end up tying up too much working capital in inventory that isn’t selling fast enough. For example, an overstock does not factor in the rapid change in consumer trends and can lead to a rapid drop off in sales of types of products bought in bulk. Businesses can’t then release working capital to purchase new stock based on consumer demand.
ii) Stockouts – Businesses on the other end of the scale don’t plan ahead enough and fail to bring in enough inventory and get caught out by supply chain disruption and end up not having sufficient stock to sell or have to buy in stock at an increased cost. These instances affect sales volumes or margins that in turn reduces overall available working capital.
Solution: Just-in-Time Inventory Management and Supplier Negotiation
Businesses can manage these supply chain working capital risks by adopting just-in-time inventory strategies to avoid excessive stock holdings and negotiate longer term payment agreements with suppliers to reduce sudden price increase impact on cash flow.
Issue 2: Dealing with Inflation
Businesses are advised to adjust their prices regularly in order to mitigate rising business operational costs caused by inflation. However, in recent times cost increases from the supply chain, energy bills and wages can often occur quicker than businesses can increase their prices and this can lead to a gap in working capital when cost increases are outpacing value of sales.
Solution: Access to short term contingency funding
In cases where inflationary costs are affecting cash flow, businesses will need some kind of contingency fund to ensure working capital is not disrupted in the short term. If businesses cannot put to one side cash reserves for these purposes, they can seek loans or other short term finance products from their banks to ensure they have sufficient working capital.
However, there are also alternative finance options available with a number of grants being provided by local authorities and business enterprise hubs to support SMEs in their local area with working capital being an allowable expense. If businesses are looking for a larger amount of funding, there are also more substantial Government backed loans available from a number of providers that cover working capital for businesses that have growth potential but may have been turned down for a traditional bank loan.
Here Is A Selection Of The Latest Working Capital Funding Schemes
i) Scottish Loan Scheme
Scottish Enterprise is providing loans for Scottish companies that have viable business plan and a clear ability to repay the debt and includes funding for working capital purposes. Funding up to £2,000,000 is available.
Application Deadline: Applications are invited on an ongoing basis
ii) Northern Powerhouse Investment Fund II – Debt Finance
Mercia and the British Business Bank have debt finance is available for SMEs struggling to access larger amounts of funding needed to accelerate their business growth in the Yorkshire and Humber regions. Funding can be used for business needs including hiring a new team, launching a new product or service, marketing costs, changing premises, purchasing new machinery and working capital costs. Funding up to £2,000,000 is available.
Application Deadline: Applications are invited on an ongoing basis
iii) Birmingham Small Business Loan Fund
Birmingham City Council is providing loans for firms that have been turned down by a bank to fund projects that help them to grow and help to create or safeguard jobs and for ongoing working capital requirements. Funding up to £150,000 is available.
Application Deadline: Applications are invited on an ongoing basis
iv) UK Focus Fund
The British Film Institute is providing funding to support projects that will increase the visibility of UK talent and content and connect UK content creators with their international counterparts. Allowable expenditure includes working capital for audio and visual and creative firms. Funding up to £80,000 is available.
Application Deadline: Applications are invited on an ongoing basis
V) UKSPF Tourism Grant – Capital
Caerphilly County Borough Council is providing financial assistance via the UK Shared Prosperity Fund to help new and existing tourism attractions or accommodation enterprises relaunch, develop, decarbonise and grow to help drive Wales’s economic recovery. Allowable expenditure includes those towards working capital purposes. Funding up to £25,000 is available.
Application Deadline: Applications are invited on an ongoing basis
vi) Events – Open Call
Newcastle City Council has a scheme providing funding to support the delivery of events on and around the five high streets with a focus on Shields Road. Working capital costs are available to retail, services and hospitality based businesses in the local area. Funding up to £10,000 is available.
Application Deadline: Applications are invited on an ongoing basis
vii) New Business Start-up Grant – Commercial Premises
Inverclyde Council is providing a scheme with funding to support new businesses that are starting to trade from commercial premises in the area. These grants can be used for costs including the purchase of capital equipment, furniture or working capital. Funding up to £2,000 is available.
Application Deadline: Applications are invited on an ongoing basis
viii) Barrow BID Business Development Grant Scheme
Barrow Business Improvement District has funding available to businesses to help them deliver a project, event or initiative, which will have a positive impact on the town centre or local businesses. Eligible expenditure includes working capital costs. Funding up to £1,500 is available.
Application Deadline: Applications are invited on an ongoing basis
How To Apply For Working Capital Schemes
Full details about how to apply for schemes and the eligibility criteria is available on each individual scheme page on the relevant website. Any deadlines, who can apply and what eligible costs the grants or loans will cover will also be outlined on these pages. Interested businesses can speak to funding advisors based at each provider who can guide them through requirements and eligibility criteria to see if the relevant funding is a match with their needs and help them to apply. There are also application forms and other supporting guidance available on scheme pages as well.
Want To Find More UK Working Capital Funding Opportunities?
If you want to see the full set of UK working capital funding currently available, please visit https://getbusinessgrants.com/