How Has SME Finance Demand Changed?

We are looking at a very different business landscape in 2021 to the ones we’ve seen in previous years. SMEs are bearing the brunt of the battering that the global pandemic has caused, which has obviously had a significant impact on their finances. However, hard times also bring perseverance and innovation in the business world. In the following blog post, we will be taking a closer look at some of the trends in loan applications this year and how SMEs are reacting to challenging times.


financial growthOverview

There are more than 4.72 million British SMEs that trade internationally. Around a quarter of these have had to slow or put a stop to their trade during the global pandemic. Not only this, but a lot of the companies who trade locally have also seen their takings cut in a big way. While the picture for the second half of 2021 is looking rosier than it once did, there is still plenty of uncertainty around, which is never going to be a good thing for the business community.


Major Challenges

Let’s take a closer look at some of the challenges that are facing the SME finance situation. First of all, there is the general management of cash flow, which has taken a big hit through the constant opening and reopening of the past year and a half. Plus, there is absenteeism, which is largely a result of self-isolation, not to mention the battering to mental health and wellbeing. Brexit still continues to hover in the background, and studies in 2020 showed that 40% listed it as a major challenge. On top of all of this, there are also the security challenges inherently involved in the online world posed by hackers and others with nefarious intent.


How Have Small Businesses Reacted?

There are several common themes that illustrate the reaction that small businesses have taken. First of all, many of them have shifted away from the most traditional forms of financing, such as bank loans, bank overdrafts, credit cards, etc., and utilised the finance schemes and support that has been offered by the government. As has to be expected, SMEs have suffered in a big way, and many businesses have required help with their cash flow situation. In fact, around 45% of them applied for external financial support in 2020, which is up from 13% in 2019.

It is expected that 2021 will herald further demand for business finance due to the inevitable aftermath of the pandemic – and its continuing impact all over the world. Due to record cash balances and an increasing level of debt, plenty of small businesses look set to borrow further in the coming weeks and months. Unfortunately, many may also struggle with debt repayment.


Alternative Finance Options

As a result of what has happened and what is still yet to come, many SME loans in the future may be of the non-traditional variety. Here at TSF, we offer a range of different finance packages that are accessible to SMEs, including:


Ultimately, if you find yourself in a challenging financial position, it is worth exploring the full range of different options that are available to you, and TSF can help out with this task. The right type of loan can help your business to weather the storm, as well as playing a major role in bringing you back stronger.

You can book a free consultation with us to discuss the financial package that is best for your company.


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