Coronavirus Business Interruption Loan Scheme (CBILS)  

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Following our highly successful SME Finance event in 2020, we are delighted to share with you the key takeaways from last month’s follow- up event: SME Finance – The Year Ahead.

For the debate, we brought together a fresh panel of local and national industry experts in the West of England to review the current finance landscape and examine what is needed next to support the future of SMEs in 2021 and beyond.

 

“There is high anxiety for SMEs, but positive opportunities as well”

Paul Jones, Senior Manager UK Network Team South West, British Business Bank, shared the latest data from the British Business Bank (BBB). Lending through the COVID initiatives had risen to £68.5 billion by December 2020. Despite enquiries beginning to drop off over the last few months, the BBB is still helping c.45,000 customers each month.

Julia Guy, Area Director Business Banking at Santander, discussed ‘pivoting’ – a term which has become widely used when talking about COVID-19 implications. Many of Julia’s customers used the first lockdown to reflect on their businesses and to create a plan B to pivot their business models to survive.

For SME business owners, their business is their livelihood. They are not just worried about their businesses, but their own health and that of their families. It is an extremely challenging time for SME business owners.

“It’s a game of two halves”

Rocketmakers Scale-up Lead, Briony Phillips, talked about the finance landscape from an investor point of view. She shed a light on the volume of investment in the South West, which looks positive at face value. However, upon further investigation, the data reveals a significant decreased in investment for early-stage companies.

Laura Barrow, Finance Director for Bristol and Bath Regional Capital, gave us insight from a Social Enterprise perspective. She explained that although Social Enterprises are accustomed to working on thin resources, they are now finding that there is simply no time to think about and plan for the future, which could jeopardise their survival.

CEO of Destination Bristol, John Hirst, was well-positioned to provide an overview of how the tourism and hospitality sector has been affected. Although John was quick to point out that the majority of businesses feel supported, it is the night-time economy that still requires consideration. John highlighted the stark impact of Covid on the visitor economy; in 2019, Bristol recorded its highest ever figures in terms of visitor numbers and spend; in 2020, it recorded its worst.

“Combatting hardship should be priority”

Paul Jones reminded us that the deadline for Coronavirus Business Interruption Loan Scheme (CBILS) applications is approaching. Anyone who needs to restructure their business should consider applying for CBILS now.

John Peters, Managing Director of SWIG Finance, mentioned that many of SWIG’s customers have had to close doors through no fault of their own, and it is the businesses in those directly impacted sectors which may need more support than others.

With a longer-term view, John said that SWIG’s customers typically do not have collateral to raise traditional finance and so it will be crucial that there are guarantee mechanisms in place to enable lenders to continue providing unsecured finance with reduced risk to capital. John voiced his concerns about the businesses who are falling through the cracks, in terms of support. He believes that CDFIs, such as SWIG, will be critical in the recovery of SMEs.

These comments were mirrored by Briony Phillips, who remarked that the fundamental challenge SMEs have is not understanding their finance options. Many business owners approach their banks first but may not look elsewhere.

Collaboration between organizations will be key in ensuring that these businesses are referred to the relevant sources of support.

Laura Barrow continued looking at the longer-term view by pointing out that the recovery phase will take some time. When initial repayment holidays come to an end, will extensions be granted if required? Will follow-on lending be available for growth? Businesses need to know their options. Lenders and support organisations need to help SME leaders as they navigate their way through their funding options.

John Hirst crucially pointed out that there are many businesses who are struggling to know where to go next – it is these who need the support the most.

“Harnessing Entrepreneurial Spirit”

Julia Guy emphasized the need for entrepreneurial spirit in these challenging times and highlighted the need to support startups and early-stage businesses to ensure that the economy remains buoyant in the future.

John Hirst continued to reflect that it is a difficult time for businesses to plan ahead, but there are opportunities out there and many people are most focused now than ever.

John Peters stated that SWIG Finance is typically funding 2 new start-ups a day – they have been inundated with applications as many people are seizing the opportunity to become self-employed. John explained that the key challenge for SWIG is ensuring that they support the right start-ups in the right way by investing time in getting to know their customers, whilst ensuring the application process is as fluid as possible.

Parallel to John Peters’ comment, Paul Jones advised that British Business Bank are also experiencing a significant increase in start-up related activities, with website traffic doubling since the pandemic started.

Watch the debate here;