SME funding and sustainable long-term recovery – comments

It’s been revealed that 14% of SMEs owners have used their personal savings for immediate financial support during the pandemic, according to a survey conducted by Opinium for Nucleus Commercial Finance. 44% of the business-owners surveyed also said that their companies had been negatively impacted by coronavirus and the subsequent lockdown.

On top of that, British businesses have borrowed almost £35bn under the government’s three emergency coronavirus credit programmes, but the approval rate for coronavirus business interruption loans (CBILS) remains just over 50 per cent.

Tim Vine, European Head of Finance & Risk Solutions at commercial data and analytics firm, Dun & Bradstreet: “Small businesses are the ‘engine’ of the UK economy, making up the majority of the UK’s private companies. When Dun & Bradstreet surveyed small and medium enterprise (SME) owners pre-pandemic, only half (49%) of respondents felt having access to finance was critical for success – but times have changed. Funding is becoming a lifeline for many small businesses who are facing serious financial challenges due to COVID-19 with 42% of the trading businesses reporting they have cash reserves to last less than six months and many facing an uncertain future.

“Despite UK businesses borrowing nearly £35bn from banks and alternative lenders through the three main emergency coronavirus schemes, recent research suggests that one in seven SMEs are using personal savings to help them survive the pandemic. Dun & Bradstreet’s pre-pandemic survey also found that 23% of respondents said they would turn to family members and friends for financial support with 25% using a private investor, rather than applying via banks or government schemes.

“With over 960,000 applications for the Bounce Back Loan scheme and a further 93,000 for the Coronavirus Business Interruption Loan Scheme, lenders will be taking into consideration data such as credit scores, payment performance and financial health when taking decisions. It is important for businesses to have a viable proposal and repayment plan to ensure a sustainable long-term recovery.”