In a volatile new financial year, here is what SMEs can rely on

Despite continued uncertainty, Andrea Reynolds, Founder and CEO at Swoop, says that the market will find solutions for struggling businesses.

In a volatile new financial year

Despite continued uncertainty, Andrea Reynolds, Founder and CEO at Swoop, says that the market will find solutions for struggling businesses. The difficulty will be in knowing where to find the help your business needs

The new financial year begins with unusual volatility: the cost of living is going up and creating problems for consumers and businesses. The impact of the situation in Ukraine remains uncertain and the Chancellor’s Spring Budget Statement has been received with underwhelming reviews. What does this mean for SME owners looking ahead to the summer?

Volatility, however, is something that SMEs have got used to since the Covid pandemic turned our lives upside down. For businesses, the most noticeable change will be about how finance companies will compete to solve their customers’ problems. Consider how a company that took out a CBILS loan at the beginning of the pandemic may be faring: they are likely to have taken out that loan under less than ideal circumstances in which getting the money meant the difference between putting things on hold and shutting up shop permanently.

Under such circumstances, you do what you have to do.

With the introduction and phasing out of the CBILS-replacing RLS, that company may well be looking at their borrowing and realising they are paying too much. If there is a return to normality it is this: customers are beginning to remember that they have the power when it comes to borrowing.

At Swoop, we have already talked to a number of customers who need to restructure their debt, if only to free up the money to pay the energy bill. I have long been an advocate of blended funding – a grant here, a loan there – but as costs rise, businesses will have to become adept at playing Tetris with their finances to make sure that there are no gaps left uncovered.

As a company that deals specifically with SME funding across grants, finance and equity, we are seeing two trends emerging.

First, there has been an uptick in enquiries for commercial mortgages. Despite dire warnings about interest rate rises, mortgages are still the most cost-effective vehicles for borrowing and a customer will often find that putting their debts in one place not only saves them money on a monthly basis, they are also working towards having a major asset to show for it at the end.

The second trend has been in a reliance on a new generation of accountants and advisors. Again, these are professionals who have stepped up to fill a gap in the market, and that gap has been created by an explosion of products on the market. Previously, if a business needed money, they would go to their bank, which would say yes or no, and that would be that. Today there are hundreds of specialist lenders with thousands of products. The accountants who are really valued by their clients are the ones who can help them navigate this confusing landscape. The ones who cannot do this may be the ones treading water.

Swoop remains committed to shouting loud for the country’s SMEs at a time when there have never been so many solutions for businesses yet so much uncertainty and confusion about how to access them. In the coming year we will have to stick together like never before, share our hard-won knowledge, ideas and expertise, and have each other’s backs. My new financial year’s resolution is to meet more people, especially now that we are allowed to once again.

It is as a community that we will continue to thrive in the face of whatever is thrown at us. And I have a feeling that in the next 12 months, we will have a lot to deal with. The response has to be to start building networks now, reconnecting with those who may have fallen by the wayside, making space in the diary for catching up and giving each other the support we want for ourselves.

Andrea Reynolds
Andrea Reynolds

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