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Why awareness of SME finance options now is critical

As the country gradually moves out of lockdown, businesses can start to target regrowth. But there is evidence that leaders are unaware of the financial support available to them. So, what do they need to know?

New research shows that many SME business owners lack understanding of the various government financial support schemes. According to Nucleus Commercial Finance, almost 20% of leaders have no awareness of a least one of the schemes, while 23% are aware of at least one scheme.

The lack of awareness is a clear disadvantage at a time when access to finance is crucial to post-lockdown rebuilding and recovery. And given the findings of this study, it is by no means a stretch to extend this lack of understanding to other SME finance options.

Regrowth and why access to SME finance matters

Now is a critical time for small businesses. After a prolonged period of decline, the economy is beginning to bounce back. Latest figures show a return to economic growth in March, with GDP up by 2.1%, services up by 1.9% and manufacturing up by 2.1%.

With lockdown restrictions being lifted, this improved performance looks set to continue and it is essential that small businesses profit from this momentum. However, raising capital for growth planning and maintaining cashflow will be far from easy.

There is an obvious focus on increasing sales and launching new products, but there is also a clear appetite among firms for developing digital services and the use of digital tech, and for investing in staff development and wellbeing.

At the same time, there is need to strengthen cyber-security, in particular at firms where home-working will be a long-term policy, and to continue to adhere to Covid-19 safety protocols. Businesses must also plan for the time when tax holidays come to an end and loans have to be repaid.

This all means that awareness of SME financial options couldn’t be more important, in terms of a proper understanding on government business support schemes, mainstream facilities and the services of alternative lenders.

Post-lockdown recovery and alternative lender help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the coronavirus pandemic, alternative finance facilities such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Notably, alternative lending is playing a prominent role in the government’s new headline emergency support scheme, the Recovery Loan Scheme. Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

The range and importance of SME finance options

The end of lockdown is in sight and a return to some form of normality beckons. Profiting from this stabilisation and economic fillip is vital for small businesses. As such, it is essential that owners are aware of all the small business finance services available to them, from the government’s various emergency support schemes to alternative finance facilities.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.

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