SMEs are the backbone of any healthy economy; they drive growth, provide employment opportunities, and open new markets. In the UK, they account for three-fifths of the employment and around half of the turnover in the private sector.
However, there is no doubt that COVID-19 has been a deeply worrying time for SMEs. One in five (20%) business owners said they have considered closing as a result of the pandemic, and nearly two-thirds (63%) have seen a decline in revenue, with 19% making no profit at all during the lockdown. The research also shows that many business owners have had to make tough decisions during the crisis, with a third (30%) using their own money to keep the business afloat and a similar number (33%) being forced to furlough staff.
Of course, the UK government has released a string of measures to try and push SME growth at this time of adversity. The UK depends heavily on the ability of SMEs and their agile responses to market changes to rescue the fledgling economy, and £57 billion has been provided to SMEs through government schemes.
Data from the Treasury showed the bounce back loan scheme (BBLS) remained the most popular scheme, with 1.3 million businesses accessing £38.02 billion through this route up to September 20. This was followed by 66,585 firms receiving £15.24 billion through the coronavirus business interruption loan scheme (CBILS).
From August 16 to September 20, the schemes collectively supported an additional 90,000 firms with £4.66 billion. Nearly two-thirds (65 percent) of firms applying for the fund were approved for government funding.
The CBILS scheme, in particular, has been a lifeline for thousands of small business owners around the country. Under the CBILS scheme, the government lends money up to £5 million, and charges are covered for the first year. More than 55,000 UK businesses have been approved for £12.2 billion in CBILS funding. The deadline for CBILS has recently been extended to January 31st.
Non-bank lenders have played a vital role in providing finance and emergency loans to SMEs, providing £57.31 billion to 1.33 million businesses through the government’s emergency loan schemes. Some accredited alternative lenders include Funding Circle, Nucleus, LendingCrowd, and White Oak. Since April, Funding Bay has helped raise over £25 million for businesses with an APR of 3-12%. If your business needs funding through the government’s CBILS scheme, get in contact with one of our brokers here.
Alongside these government schemes, the heart of SMEs remains resilient. The ‘bounce back’ strategy looks at the enterprise level needed to help SMEs survive the pandemic and the new business environment that will emerge afterward. Despite the current situation, businesses remain optimistic, with three quarters (75%) of business owners saying they feel more confident than they did a month ago, and furthermore, two thirds (68%) of SMEs believe they will return to pre-Covid levels as early as 2021. This optimism may be due to the innovative measures taken by businesses to ‘adapt and survive’ within the pandemic restrictions, as two in five (39%) firms have changed their business lines to adapt to the crisis.
If you are a business looking to begin your ‘bounce back, then apply for a CBILS loan with Funding Bay here.
