A survey conducted by commercial data and analytics firm Dun & Bradstreet found that prior to the coronavirus outbreak only 22 percent of small and medium sized enterprise (SME) respondents viewed securing funding for future growth as a key business priority.
However, today’s latest figures on COVID-19 related loan schemes suggest that the pandemic has increased requirements for finance, with loans of £8.92bn being handed out to 45,843 UK businesses. Although half (49%) of SMEs surveyed at the turn of the year felt that having access to finance did not impact their ability to succeed in a pre-pandemic environment, funding is becoming a lifeline to many small and medium businesses who are facing serious financial challenges as a result of COVID-19 and the associated lockdowns and disruption. Even before the pandemic, SMEs were looking to the government for support with nearly three quarters (73%) of survey respondents believing the UK government could do more to help small businesses.
Funding is available via government schemes from both traditional banks and alternative providers such as challenger banks and specialised lenders. Encouraging more competition in the lending market has been a key objective for the government as part of the Small Business Act, and nine of the leading banks are now mandated to provide credit information to other lenders to open up access to finance via the Commercial Credit Data Sharing scheme.
Tim Vine, European Head of Finance Solutions at commercial data and analytics firm, Dun & Bradstreet commented: “While accessing finance may not have been a priority for the majority of SMEs six months ago, the ongoing impact of COVID-19 on businesses and their supply chains has pushed financial security and resources back to the top of the agenda.
“In order to weather the economic downturn, it’s likely more businesses will be looking to access finance to protect themselves against the current challenges and funding is now available from a range of sources.
“Potential lenders are likely to take in consideration data such as credit scores, payment performance and financial health when evaluating applications. Companies also need to have developed a viable proposal for how a loan will be used and plans for repayment.”