According to the Federation of Small Businesses (FSB), there were more than six million SMEs operating in the UK in 2020, representing 99% of all business.
Research by the British Business Bank shows that at the start of 2021 more than a fifth (21%) of UK businesses were confident that they would grow throughout the year. This positivity was more prevalent amongst SMEs, possibly because their size allows them to respond faster and with greater agility than their larger counterparts.
Arguably, helping them to grow has been one of the biggest challenges we have seen because, whilst the businesses themselves are agile and willing to adapt and flex, they sometimes struggle to find a funding partner which can do the same.
For the majority of our SME clients, the funding requirement is not usually too complicated; a business needs to borrow money to either navigate through a difficult patch, take advantage of an opportunity, or to simply provide them with the working capital to grow.
Whatever the reason for the funding, whether acquisitions, asset purchases, MBOs / MBIs or just plugging an imminent cash gap, what is critical is that these businesses cannot afford to miss the moment. Timing is often the most important thing a business owner must navigate. One of the biggest frustrations we are currently hearing from SMEs, is that uncertainty in the lending market is making them miss these crucial milestones.
Business owners need both clarity and confidence from their funders. At Reward, we talk a lot about speed of delivery but arguably what SMEs also need, right now, is certainty of delivery, and we are immensely proud of our performance in both these areas. A fast decision is only valuable if you then deliver on it, and all too many businesses are being let down at the eleventh hour. This means they must quickly change direction or worse still, they miss the moment.
For an increasing number of businesses, this confidence simply cannot come from the more traditional lenders and navigating through the mass of other funders vying for their attention isn’t something a typical business owner has the time to do. Historically, a bank manager was the owner’s confidant and sounding board, but those relationships have gone the same way as the traditional lenders’ appetite.
Right now, a new trend is emerging, one in which SMEs looking for finance are building stronger relationships with the intermediary and adviser community. More than ever before, they are looking to brokers to help get the much-needed finance delivered. And if it is delivered quickly, even better.
These relationships have become invaluable in helping SMEs navigate through this changing landscape and find the alternatives that are out there. This is why we work so closely with our introducers at the NACFB to source the right funding solutions for our clients.
I am confident that there is still the right support for SMEs, the biggest challenge currently is making sure they know where it is.