With the UK entering a deep recession as a result of the coronavirus pandemic and subsequent lockdown, it is vital that SMEs are given the support that they need to survive and continue to grow as such a key part of the UK economy and provider of many jobs. Despite this, the majority of lending to SMEs since the outbreak has been from the Government’s emergency schemes which is problematic when this will soon stop and these companies need access to money.
A Key Part of the UK Economy
The UK’s small businesses are needed now more than ever with these companies employing around 3.5 million people and around 36,000 SMEs turning over between £1 million and £50 million which contributes an enormous amount to the economy. Traditional banks now do not have the available finance to service new clients having helped to deliver over £11 billion through the Coronavirus Business Interruption Loan Scheme (CBILS), so what can SMEs do to get the funding that they need?
Fintech is an evolving industry but one which is already playing a key role in trying to revive the economy through providing a lifeline to SMEs with many acting as online lenders as well as others acting as intermediaries and connecting SMEs with investors capable of providing financial backing into those that show potential. This will be vital once the government support ends and could help to stimulate the UK economy in the coming months.
Alternative forms of finance could also play a key role in helping SMEs to survive and then grow in the post-pandemic marketplace. Alternative sources of financial support like cash flow finance could be of great use to SMEs in the current situation as it this is an unsecured loan which can be used to grow the business and is backed by the company’s expected cash flow.
This could be used simply to tide the business over during this challenging period and/or to grow and develop the business as the economy starts to recover. Many businesses will have to adapt and change in the coming months in order to survive and this can be at a cost, so alternative forms of finance could help businesses to achieve this.
It is going to be a tough road ahead over the coming months with the UK falling into a recession as a result of the pandemic, but SMEs could play a key role in reviving the economy and hopefully contributing to a V-shaped recovery if they are able to get the financial backing that they need to grow.