Small businesses are ambitious for growth as the UK reopens but need the right mix of finance options to succeed
Charting the progress of small businesses over the course of the pandemic, we have recorded their highs and mainly lows. With Freedom Day having arrived, we hoped to see signs that the UK’s powerful SME sector was charging ahead on the route back to sustainable and profitable trading.
And there are indeed welcome signs, with owners feeling more optimistic about their prospects and showing signs of a willingness to invest in growth.
Our SME Tracker, which we carry out with The Corporate Finance Network (CFN) reports what small business owners tell their accountants. Our latest survey revealed 89% are back trading at or above the level they expected, which is a reassuring increase.
Confidence is also on the rise. Last time, half of worried owners thought full recovery to pre-Covid levels would take at least two years, but this time a resounding proportion of almost 90% thought their productivity and turnover would be back within that timeframe.
And more than 28% had brought forward plans to obtain additional finance to invest in their business.
However, for all this optimism and positive energy, there were a few troubling concerns, which we hope will not derail the sector’s ability to lead the economic recovery.
Two-thirds of business leaders (67%) have found it more difficult to obtain even an overdraft from their bank in recent weeks. One-third have also struggled to finance their growth for the next year with other traditional options, such as mortgages or finance leases.
This has led to an increase in mental health problems, with owners feeling frustrated by their inability to take advantage of new opportunities, backed by the right mix of finance.
A worrying 57% report that they are feeling more stressed and anxious and almost 6% are feeling unable to cope, with 12% saying they are not sleeping well.
The difficulties SMEs are facing come at a time when they are desperate to re-establish their businesses and put themselves on the best footing for growth.
Many economic reports are predicting a strong rebound in the UK economy and our members are saying that they are confident and willing to invest. But they need to find the right mix of finance to power that recovery, which may include both traditional sources and via financial technology lenders.
We appeal to the financial services sector to support small businesses at this crucial time, to provide them with the right financial backing for them to get back to growth.
Our SME sector is productive and powerful. It will be pivotal in driving a sustainable recovery, but we must enable it to grow with access to finance that doesn’t lead to personal debt.
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