Eight in 10 small businesses taking action to strengthen for the year ahead

With the Office for Budget Responsibility forecasting that the UK economy will be in recession until the third quarter of 2023*, new research from Novuna Business Finance has found that the prospect of stormy seas ahead in the coming year is prompting eight in 10 small businesses to take fortifying action.

The research tracked the responses of over 1,200 small business owners and senior decision-makers across the country, every year since 2019. It found that not only had the proportion of those taking actions to strengthen their business increased this winter (+4% year on year), but the measures being taken have become increasingly defensive. This contrasted significantly with the more confident, spend-related actions in previous years.

Focus on cost reduction

Looking at cost reduction steps, the results showed that the proportion of businesses focused on reducing fixed costs reached a four-year high, with just over a quarter (26%) looking to action this. This was an increase of 9% year-on-year, and +7% compared with pre-pandemic levels. Similar increases were seen this year in the proportion looking at budget planning (17%, up from 11% in both 2021 and 2019), and the proportion looking for back-office efficiencies/streamlining (10% up from 6% in both 2021 and 2019).

Spend activities take a back seat

Meanwhile, looking at measures that involved active spending, the picture appeared quite different to both last year and in pre-pandemic times. While taking efforts to increase new business and sales remained the most common measure been taken to bolster these enterprises, the proportion looking to do this (29%) was down 3% on last year and -9% on pre-pandemic levels. Similarly, the proportion looking to offer new service lines and products fell to 18% (down 4% year-on-year and -6% lower than 2019).

The proportions also fell when it came to investing more money in marketing (12% -1% on 2021, and -4% on 2019), increasing advertising spend (12%, -1% on 2021 and -5% on 2019), and improving the digital capabilities of the business (8%, flat on 2021 but -3% lower than in 2019). In addition, the proportion looking to build up their financial reserves was at a four-year low of 17%.

Precautionary measures most likely in manufacturing sector

In the manufacturing sector in particular, some of the differences became more pronounced still, with large swings in the proportions prioritising cost-cutting instead of active investment.

Here, the proportion of businesses looking to increase new business and sales fell 12% year-on-year to 30%, and -28% since pre-pandemic levels. The proportion looking to increase advertising spend levels dropped to 10% (-3% on 2021, and -16% on 2019), while those increasing marketing efforts fell to 16% (-1% on 2021, and -5% on 2019). Those investing to improve the digital capabilities of the business also fell to 5% (-1% on 2021, and -6% on 2019).

Meanwhile there were increases in the proportion looking to reduce fixed costs (+5% year on year; +8% since 2019), review business budgeting (+5% and +8%), or review efficiencies in their back office (+4% and +2%).

Jo Morris, Head of Insight at Novuna Business Finance comments: “Rising inflation, record-high energy costs, and a sustained and prolonged period of uncertainty is contributing to unprecedented levels of pressure for small business owners. Many are currently taking hits to buffer customers and clients, absorbing increased production and energy costs in the hope price rises will settle at some point. Understandably, within this context, the desire by business owners to strengthen their businesses will increase. What is interesting is the impact of not just this period, but the culmination of the last four to five years, is prompting a switch to the back foot comparatively with the outlook pre-pandemic.

“For every small business in the next 18-24 months there will be extreme challenges that will require difficult and important decisions to be made by their leaders. It has never been more important to have a plan that can chart a course through the storm, and well beyond, to inform immediate decisions as they arise. At Novuna Business Finance, we work with small business leaders to help them achieve growth and plan with a long-term vision.”

Actions small businesses are taking to strengthen their businesses in the coming year

Tuscan Capital hails from Fast Track bridge process across all metrics

Tuscan Capital, the short-term property finance specialist, has announced that its Fast Track process, introduced in July 2022, has brought major improvements to its turnaround and completion times, as well as significantly increasing loan enquiry and conversion figures.

Fast Track allows an AVM to be used as an alternative to a RICS property valuation and inspection, where Hometrack data supports the client’s estimated value or purchase price.

Tuscan can rely upon an AVM to 70% LTV for purchases and 60% LTV for refinance up to £750,000 valuation, with a confidence level accepted from 4.5.

In addition, higher value properties can also be underwritten by utilising a desktop valuation, while title insurance and search indemnity insurance can be utilised, and credit-approved term sheets can now be issued within four hours of an enquiry.

Meanwhile, Personal Guarantees, which require all parties to have independent legal advice, are not required on cases at 65% LTV and below.

Latest data shows that all these elements have significantly sped up the application process for most bridging cases. At a time when cases across the bridging sector are taking longer to complete, Tuscan’s average turnaround time since Fasttrack launched is 41 days, with purchases taking 23 days on average. The fastest deal under Fast Track took just seven working days.

AVM and desktop valuations have been utilised in 35% of all completed cases since July, while loan enquires since Fast Track’s introduction are 26% greater than in the first six months of the year.

Equally impressive is the 38% increase in conversion rates from Fast Track.

An example of how Fast Track works in the real world is with the funding of urgent refinance for a property conversion project in Essex. The applicant originally purchased the property to convert into two flats, but delays with the buy-to-let mortgage meant the current bridging facility was due to expire, which would have resulted in 5% extension fees, despite the fact that all the works had been completed.

The broker, John Tarazi from Echo Finance, approached Carl Graham, Tuscan Capital’s regional director, who ensured the case utilising the lender’s Fast Track product. A desktop valuation, which was issued on the same day the enquiry was presented, was turned around in 24 hours and the case completed in just nine days from start to finish.

John Tarazi from Echo Finance commented: “Tuscan Capital and especially Carl moved this case under exceptionally tight deadlines to enable the client to refinance an existing bridging loan. Carl and the team pulled out all the stops to ensure that we could complete the deal in nine days which ultimately saved the client a 5% default interest fee, totalling around £15,000.

“I would happily recommend Tuscan Capital on any future schemes we have. Great job guys.”

Colin Sanders, Chief Executive Officer at Tuscan Capital, said: “When we introduced Fast Track we knew that many of our bridging loan customers would benefit from both cost and time savings. That said, we’re delighted to release these statistics which provide real evidence of the advantages from using Fast Track.

“At a time when bridging cases are taking longer complete, we’re delighted to be bucking the trend. We’re equally pleased by its positive effect on completion rates.

“We’re not standing still, however; we recently added another underwriter to our team to improve our service and have further new appointments planned for the new year. I don’t think it’s an exaggeration to say that right now, Tuscan Capital has market-leading service and highly competitive pricing, which add up to make a very strong bridging proposition.”

FCA proposes ways to make financial advice more accessible – HL comment

The FCA is consulting on proposals to create a separate, simplified financial advice regime, making it cheaper and easier for firms to advise consumers about certain mainstream investments within stocks and shares ISAs.

The regulator is consulting on:

  • Streamlining the customer ‘fact find’ so advice is more straightforward for both firms and customers
  • Limiting the range of investments within the new regime so the advice is easier to deliver and understand
  • Making the qualification requirements for the new regime more proportionate so delivering the simplified advice is less costly for firms
  • Allowing advice fees to be paid in instalments so customers aren’t burdened by large upfront bills

Chris Hill, CEO, Hargreaves Lansdown said: “We support the FCA’s move to make investing simpler and it’s great that the FCA recognises that today’s all or nothing approach to advice doesn’t suit everyone, especially those with sufficient savings who are started out on their investment journey.  The proposal should help narrow down options for those who want to invest, but aren’t sure where to start.

But this is just one group of people who would benefit from investing.  We know from our Savings and Resilience Barometer that the majority of households with sufficient savings do not invest and are missing out from longer term returns.  At HL, we can see from interaction with our guides and information online that people often need help earlier in the planning process.  Others need help to decide whether they should invest at all, or which tax wrapped product is better for them.

The proposal only solves a small part of the much bigger advice gap problem and we welcome the fact the FCA committed in September to a much wider holistic review of advice and guidance.

For a long time, Hargreaves Lansdown has recognised that the advice boundary is the key barrier to our ability to guide clients towards better outcomes.

This review is a big opportunity to demonstrate how we can use today’s technology, data and innovation to guide people with their financial choices.  If we don’t allow for more personalised guidance using this new technology, we’re missing the opportunities which OpenBanking, the Pensions Dashboard and, in due course, Open Finance can bring.  This is crucial if we are going to do everything we can to help savers and investors in the cost-of-living crisis and support the nation as we rebuild our financial resilience in the longer term. We have experienced this with our Better Investor programme where we send targeted nudges and can see beneficial changes made by our clients.

The way to help far greater numbers of consumers with their financial decisions is by:

  • Allowing firms to better personalise their content under a new regime for personalised guidance. This improves understanding, engagement and decision making as HL has shown with its Better Investors nudge programme (see below)

Doing so allows firms to innovate to allow them to make better use of data on client behaviours and activity, for the benefit of their clients, to help them to improve their decisions and outcomes

  • Improved personalisation and nudges feed into the new HL Augmented Advice and Guidance service due to pilot launch shortly”

Augmented Advice and Guidance

HL is working on its augmented service that will leverage data and digital technology combined with human expertise, to support clients in the moments that matter, offering easy transition to advice that is only provided when needed and only paid for when used.

Better Investors

HL already uses data to help improve client decision making through our Better Investor programme. This learned experience is how and why we know people want more support and what that support looks like:

  • 685,000 clients have received at least one nudge through the Better Investor programme. All clients falling into our audiences have been contacted at least once, with strong engagement.
  • Visits to the financial education section of our website, Learn, are up 64% YoY.
  • Four metrics are targeted: Diversification, Risk, Cash and Rebalancing
  • All these metrics have seen improvements, up to 6.7% – a good set of results against a challenging economic backdrop and record low levels of investor confidence.
  • Content and communications are already being iteratively improved.

The HL US fund launch results on Better Investor scores

  • We saw a significant change to clients’ portfolios post launch for those who placed an instruction for the US fund.
  • 38% of clients who invested in the HL US fund at launch were in the Better Investor target audience groups for diversity, risk or cash. Investing in this fund significantly improved the diversification of their portfolio
  • 88% of clients who invested in this fund at launch subsequently moved out of the Better Investor target audiences, which shows how our programme and proposition is helping our clients to build a well-balanced and more diverse portfolio, which we know from our research is better for investment outcomes and performance.

Chris Hill, CEO, Hargreaves Lansdown said: “This amendment from Harriett Baldwin is extremely welcome.  The FCA’s evaluation of the Retail Distribution Review and the Financial Advice Market Review found that 4.1 million people receive financial advice, 12.5 million are receiving some more generic guidance and 35.8 million people are getting no support with their financial decisions at all. At the same time, we know more and more about our 1.7 clients which gives us such unique insight into the retail market through data from sources like open banking, and from understanding their digital journeys.

“We know we would have the power to nudge clients towards better outcomes if we were better able to simplify client journeys, helping them with decisions.  Harriett’s amendment provides the opportunity for the Government to open up innovation, within a regulated environment, to help the majority of people can’t afford or access full financial advice.”

Bury company’s global growth ambitions accelerated by £220,000 funding deal

A Bury-based ecommerce business has been boosted in its attempts to expand globally, after agreeing a £220,000 funding deal with Reward Finance Group.

Clear Crystal, which has been trading for 10 years and is based at Bury Business Centre, is a leading online jewellery and giftware retailer. Key to growing sales worldwide is via securing a working capital facility with Reward, which provides tailored business finance loans and asset based solutions between £50k and £5m to SMEs.

The funding through the lender’s Business Finance product enables the retailer to invest in the inventory needed to fulfil orders globally, having traditionally only supplied to online shoppers in the UK.

Central to this global expansion is a new deal secured with major American-based online marketplace, Groupon, with the working capital allowing Clear Crystal to guarantee fulfilment and place stock on the ground at Groupon’s US warehousing facilities near Chicago.

The retailer has also recently secured a partnership with the Ideal World shopping TV channel in a bid to further grow its UK sales.

Commenting on the new funding deal, Clear Crystal managing director, Lee Donaldson said: “The funding facility provided by Reward is a massive boost to our global growth ambitions and ability to introduce our jewellery and giftware products to new markets. It provides the working capital to secure vital inventory, which in-turn enables us to fulfil international sales and partnerships such as the potentially game-changing one with Groupon in America.

“After 10 years of operating solely in the UK, we’re entering a very exciting period of expansion for the business. Through working closely with the team at Reward, I’ve been really impressed with their understanding of my business needs, their flexibility and the speed with which they operate, something which is critical in the fast-paced world of online retail.”

Steve Noble, managing director for Reward Finance Group in the North West, added: “Being able to provide the financial support that helps Lee and his business achieve its international growth aims and realise its strategic vision is hugely satisfying. We’ve built up a close working relationship with the team at Clear Crystal to understand their business, future plans and how our tailored funding solution can help overcome any short-term operational challenges such as stock availability.

“It’s a very significant chapter for the business and we look forward to seeing its continued expansion both in the UK and globally.”

Wattbike secures £3.25m funding package from Praetura to develop digital product suite and target new international markets

Wattbike, the elite exercise equipment manufacturer, has partnered with Praetura Commercial Finance to help fund its ambitious global expansion plans. The agreed £3.25m asset-based lending facility will help the team invest in its Hub App to further enhance the health and fitness of every Wattbiker, which works in tandem with its indoor exercise bikes, as well as target key global territories in the North America and Asia-Pacific regions.

After launching in 2008, Wattbike has seen unprecedented growth, securing its position as the indoor exercise bike of choice for the world’s leading sports teams, athletes and coaches, British Cycling, Manchester City and cycling fanatics across the UK. As the only exercise bike endorsed by British Cycling, Wattbikes are now used by over a 1000 professional sports teams and 500 Olympic medal winners. The team has sold over 100,000 bikes, with over 240,000 sessions uploaded per month. Piper, the leading specialist investor in consumer branded businesses, invested £11.5m into Wattbike in September 2020.

Wattbike was born out of elite sport, transcending into the commercial fitness industry and consumer fitness sector. Since then, the business has won significant commercial contracts in the health & wellbeing, education, professional sport, military & uniformed services, medical and hospitality sectors with contracts signed with David Lloyd, the England football team, Hilton Hotels and the British Army. Most recently, Wattbike has become an official supplier to New Zealand’s rugby squad, the All Blacks.

The pandemic created significant challenges for Wattbike. From severe surges in demand to skyrocketing supply costs, the team navigated a series of unprecedented changes. Wattbike’s business model has been stress tested and has emerged more adaptable, entrepreneurial and resilient.

As a breakout UK entrepreneurial success story, the Wattbike team has been on an unexpected journey of rapid growth. The team now only chooses partners and suppliers who understand the vision and remain flexible to the business’ needs in an increasingly unpredictable environment.

Richard Baker, CEO at Wattbike, said: “We are fiercely proud to have built a business that is chosen by the world’s best teams and athletes. This has enabled us to continue to scale our brand, product and services into the consumer and commercial markets, domestically and internationally. We are excited about the future as we progress through the next phase of our plans: building a more accessible brand, products and digital services with the mission of improving the health and performance of every Wattbiker, with the continued support of Piper and new funding from Praetura Commercial Finance. Praetura’s ability to get in and understand the business quickly, see the opportunity and create ways to unlock finance options for Wattbike made them a natural partner.

Stuart Bates, commercial director of Praetura Commercial Finance, said: “Helping a best-in-class business like Wattbike achieve its goals is why we started Praetura. Spending time with Rich and the team, hearing how they’ve built one of the most noteworthy brands in elite sport and helping design a funding solution that supercharged their strategy for the future were a real privilege. Needless to say, the Praetura team includes a few cycling fanatics who are evangelical about Wattbike’s products. You can see the passion Wattbike’s team put into its bikes and the fitness community that develops around them. We look forward to working with the team again in future and wish them every success.”

The deal was managed by Henry Wheeler at Praetura and introduced by Adam Simpson from Silkstone Consultants.

New-build buyer demand keeping the property market afloat

Research by property developer, Stripe Property Group, has revealed that while the property market may be starting to cool, the appetite for new-build homes from the nation’s homebuyers remains stronger when compared to those purchasing existing homes.

The analysis by Stripe Property Group shows that in the last fortnight, the new-build sector has helped fuel 7.2% of all homes reaching the market for sale across Britain.

The East Midlands has seen the largest boost to for sale stock supply courtesy of the new-build sector, with new homes accounting for 9.2% of all homes listed for sale in the last two weeks.

8.5% of all homes listed recently across the East of England have come via the new-build space, with Scotland (7.8%), the West Midlands (7.7%) and London (7.3%) also enjoying some of the largest supply boosts from new homes.

But it’s not just supply that is benefiting from new-build delivery, the sector is also helping to fuel demand.

14% of all new homes listed in the last two weeks have already gone under offer or sold subject to contract. This is 2% more than the existing market, where just 12% of recently listed homes have already sold.

In Scotland, a fifth of all new homes are being snapped up within two weeks, 8.4% more than the 11% of existing homes that are selling within a fortnight.

Demand for new homes is 7.5% higher versus the existing market in Yorkshire and the Humber, with the North East (+7.2%), East of England (+4.1%) and the North West (+3.1%) also seeing new-build demand sit some way above the demand levels for existing homes.

In fact, demand for new homes is higher in every region of Britain bar three – the South West (-0.5%), London (-0.7%) and Wales (-1.5%).

Managing Director of Stripe Property Group, James Forrester, commented: “The property market as a whole is certainly starting to show signs of wear and tear following a period of turbulence spurred by increasing economic uncertainty. This has largely impacted the level of buyers entering the market, although we are now starting to see signs that house prices are stuttering.

“Despite this, the new-build sector continues to demonstrate strength and resilience and not only are a consistent level of new homes reaching the market, but the demand for these homes remains substantially higher than the appetite for existing homes across the vast majority of the nation.

“With as many as a fifth of all new-build properties selling within two weeks in some parts of Britain, the sector looks set to weather the current downturn, with new homes continuing to sell, while commanding robust market values in the process.”

Stay vigilant with energy suppliers to ensure small firms are not overpaying, Government urged

The Federation of Small Businesses (FSB) has asked the Government to intervene to stop energy suppliers from finding routes to inflate prices, as small firms continue to struggle with soaring energy bills despite the launch of the Energy Bill Relief Scheme (EBRS).

In its letter to the Business Secretary Grant Shapps, the UK’s largest business group reveals that eye-watering bills are still landing on small businesses with insufficient discount, after the government energy rebate scheme came into effect, while energy suppliers continue to charge those with newly signed contracts at rates substantially higher than previous period.

There are also examples of small firms asked by energy suppliers for disproportionate upfront payments and told that they could be disconnected from energy if they fall into arrears. While energy suppliers have pledged not to disconnect households that fall into arrears this winter, they have promised no such help for struggling small businesses in the same position who can be cut off within 30 days.  Some suppliers even refuse to take on business customers from certain sectors out of fear that they might go under this winter.

“Across the UK, small firms await their energy bills with trepidation as well as hope, in the face of harsh economic challenges which have persisted since 2020,” the letter read.

“However, the implementation of the scheme and apparent lack of communication from suppliers is causing some concerns.”

In September, FSB wrote to Chief Executives of six leading energy suppliers – Centrica, EDF, E.ON, Octopus, Ovo, and Scottish Power – to remind them of their of roles in implementing the EBRS, as well as encouraging them to commit to freeze standing charges for small business customers, not to ask for unreasonable upfront payments and not to disconnect vulnerable small firms.

Only one – Scottish Power – responded, but only with a holding reply.  The other five suppliers did not respond at all.

No major supplier has engaged points raised by FSB to protect the small business community, at such a critical time.  The small business community has contracted by 10% – 500,000 small firms – over the last two years, and FSB is now concerned that energy providers may be putting many more at risk.

FSB Policy and Advocacy Chair Tina McKenzie said: “The lack of responsiveness from the UK’s big energy suppliers speaks for themselves and matches with what small businesses have been experiencing in the past month.

“While the energy help package is welcomed by small firms, many have come to us puzzled that their bills remain sky-high, confused about how the discounts are being applied and worried about whether they could still stay open by Christmas and need to let their staff go.

“That’s the opposite of what the EBRS is supposed to achieve. We need more transparency and support around the scheme, which is designed to help tens of thousands of small businesses cope with soaring bills and get through this winter.

“The Government should intervene to ensure that energy suppliers refrain from finding routes to inflate rates for contracts.  Energy firms should promise not to disconnect struggling small businesses this winter, in line with their commitments to households.

“It’s utterly unacceptable for energy suppliers to ask cash-strapped small firms to cough up a large sum of deposit in advance of having any turnover or profit that can fund their energy use – when the vast majority of small businesses are fighting for survival from a record-high inflation, rising interest rates and an intensifying consumer pessimism. This is basically kicking small firms when they’re down.”

“Energy suppliers need to recognise their roles in ensuring this multi-billion-pound help package serves its purpose and is not exploited at the expense of taxpayers or the livelihoods of the small business community.”

FSB strongly urges energy suppliers to:

  • Provide clear guidance and information to small business customers to explain how the Government intervention will affect their current contract or quote;
  • Ensure businesses that signed new fixed contracts after 1 December 2021 but before 1 April 2022 know that they are now included in the scheme and qualify for help;
  • Commit to freeze standing charges for small business customers, which unlike domestic consumers appear to be entirely unregulated – we are concerned that these will rise as a stealth/back-door way to raise revenue;
  • Pledge not to disconnect any small business customers who fall into arrears and are currently unable to pay for their energy bills this winter – at the moment they can be disconnected after 30 days. This would match commitments to domestic households;
  • Introduce a ‘time to pay’ arrangement to help their customers pay arrears over a longer time frame, learning lessons from HMRC and others; and
  • Ban requests for disproportionate upfront payments – this is an unacceptable response to higher bills by shoving the risk of that business failure all over to the small business to pay in advance of raising the turnover required to afford to pay for their energy use.  This would result in many becoming instantly unviable or driving a business into bad loan markets/cowboy lenders.

Together appoints Annette Tilbury as South Regional Sales Manager

Specialist lender Together has appointed Annette Tilbury as new commercial finance Regional Sales Manager for the South.

Her role will entail looking after key packager partners across the region, helping to train, support and develop the relationships that Together has with them.

Annette brings with her 38 years’ experience in the industry, working with a number of specialist lenders. She has extensive knowledge of the mortgage industry from sales, underwriting and asset management.

Her most recent role was with West One Loans as National Account Manager, where she had sole responsibility for a number of its key packager partners. She has also held positions at Foundation Home Loans, CHL Mortgages and Alliance & Leicester Building Society.

Whilst at CHL Mortgages, Annette also gained six years’ experience as Recoveries Manager within the Asset Managing team, overseeing a receivership portfolio of nearly 1,200 properties.

Annette said “I am delighted to be joining the team at Together, a prestigious company with nearly 50 years expertise in the sector. I am incredibly passionate about understanding the needs and delivering excellent customer service, adding value to build strong, mutually beneficial relationships with our key partners.

“I have a love for getting complex deals through, so Together is the perfect lender for me. The focus on customer service and speed it turns funding around is phenomenal.  It feels like everyone plays their part and we are all working together get the best outcome for the both the customer and the introducer.”

Tanya Elmaz, Head of Intermediary Sales for Commercial Finance at Together said: “We couldn’t be more pleased to have Annette on-board with our team. She is known across the industry as one of the best at what she does; her experience and knowledge will be invaluable in taking our ambitious company forward during these turbulent times.

“Her passion for the industry, her teamwork and collaboration, her professionalism and her strong work ethic will be a real asset to our team.”

Annette joins other new starters across the regions working with Tanya, with the recent appointments of three new roving underwriters: David Spruce, Kerry Jordan and Clare Sadler.

Each will be supporting Together’s key intermediaries, assessing risk and accurately preparing submissions of commercial and mortgages to support business submission and improve case quality for mandating underwriters to approve.

One in four small firms plan to close, downsize, or restructure if energy bills relief ends in April next year, new survey reveals

Small firms’ survival during the ongoing energy price crisis will depend on continued government support through Energy Bill Relief Scheme (EBRS) beyond March 2023, according to a new FSB energy survey published today.

The survey, which measured the impact of the energy price crisis on small businesses, shows small firms await with both hope and anxiety for clarity on whether they will still be eligible for support amid the on-going government review of the six-month scheme, which is due to end on April 1, 2023.

The findings have been submitted to the Department for Business, Energy & Industrial Strategy (BEIS).

A quarter of small firms (24%) plan to close, downsize, or radically change their business model if the government reduces energy support post-March next year.

This rises to 42% of firms in the accommodation and food sector, followed by the wholesale and retail (34%), and manufacturing sectors (29%).

More than four in ten small firms (44%) are considering raising prices to cope with soaring bills when the current EBRS is due to end, and a third (30%) expect to cancel or scale down planned investments.

One in five (18%) have told us they would need to keep prices the same, even though their energy bills are increasing, because customers simply cannot afford further increases.

A majority of 63% say energy costs have increased this year compared to last year. Some 44% report a double, triple or even higher increase in their energy bills, and nearly one in five (19%) say their bills had tripled or higher.

In response to the eye-watering bills, nearly half of small firms (46%) have already raised prices although it has been impossible for them to pass on full costs to consumers tightening their belts amid the cost of living rises.

In light of the findings, FSB suggests the government should:

  • Continue support under the current EBRS to avoid a cliff edge on April 1, 2023;
  • Consider the size, not just sector or geography, of firms when determining which businesses are vulnerable, and therefore entitled for further support;
  • Maximise planning certainty over the long-term so that small businesses can plan ahead; and
  • Help small businesses to invest in energy efficiency, through incentives like voucher schemes

FSB National Chair Martin McTague said: “Our research indicates that small firms are being held back from investment and are at the brink of collapse because of sky-rocketing energy costs. It’d be a real shame and great loss to our economy if those who managed to get through the pandemic and this tough winter with government support end up closing their businesses because relief ends too sharply in April.

“Latest OECD forecasts suggest the UK economy will suffer the biggest hit from energy crisis among G7 nations. But the tides can be turned if the government extends the period of energy support to struggling small businesses after the EBRS ends in April next year.

“It’s important that the government provide certainty to small firms for the long-term as they can’t plan on a six-month horizon.

“Think of the engineering business in Hampshire which 40 local families are dependent on, and the independent launderette that has been serving the community for years. To allow well-run businesses to go under would be a false economy as we enter a recession.

“Business size must be taken into account as a relevant factor in the government review of the EBRS, given the stark impact on small firms which have typically lower margins and are least able to deal with the rising costs. It can’t be a purely sector-based decision, otherwise it’ll lead to deadweight and unfairness.”

Atom changes its serviceability criteria to support more SMEs

Atom bank, the UK’s first app-based bank, has today revamped its serviceability criteria for both variable and fixed rate commercial mortgage products as it looks to improve access to finance and challenge the high street lenders.

The changes will see the serviceability criteria for its lending range simplified, including a headline reduction in minimum debt serviceability to 120% for owner occupied applications and 125% for commercial investment applications.

The serviceability policy for commercial lending is in place to ensure businesses can maintain payments during periods of stressed earnings or cash flow and under a stressed interest rate.

During a particularly volatile time for businesses, Atom is committed to making changes to increase the number of small businesses it is able to help in the current economic environment. It also means  Atom will be able to lend more to individual businesses, assisting them with their growth plans.

Atom has reduced the serviceability threshold for the majority of businesses; as part of the application process serviceability will continue to be reviewed on a case by case basis and the actual threshold will depend on the quality and strength of the business.

Healthcare policy enhancements

Since launch,  Atom has enjoyed significant success in the provision of lending to the social care sector and is now enhancing its healthcare offering to support critical businesses in the dentistry and pharmaceutical sectors, including increasing its maximum LTV and revising a number of other policy requirements.

Across both sectors, the maximum LTV against property for loans below £500k will be increased from 85% to 95%, with a maximum LTV of up to 100% against goodwill value. The management experience required has also been broadened to allow any practising or registered dentists and all practising pharmacists who are registered on the GPhC register to take out a business loan, making it easier for these businesses to access much needed funds.

The news comes on the back of Atom recently expanding its care home offering to serve specialist and children’s care homes.

Tom Renwick, Head of Business Banking at Atom bank commented: “Our serviceability criteria is in place to ensure loans can be repaid during difficult times. While we are currently living through a particularly turbulent period, we felt the time was right to make significant changes to the policy to allow us to offer our award-winning commercial mortgages to more SMEs around the UK.

“We are constantly looking at how we can best offer straightforward, transparent and competitive products to our business customers. We expect that this change will allow more SMEs access to much needed finance, helping them to plan for the future and continue to thrive post-pandemic.

“Atom recognises that changes in the lender environment have hampered access to finance for both the dentistry and pharmaceutical sectors. We have collaborated with our intermediary partners  to enhance our proposition in order to ensure these businesses have the access to the finance they need to achieve their goals and carry on the important work they do.”