Whatever stage a business is at, there is almost always a moment where the short term capital requirement is higher than the business has in their account. And this holds them back from long term success.
If this is a familiar story to you, you may or may not take comfort from the fact you’re not alone: YouGov research commissioned by Manx Financial Group PLC has shown that in 2024, 31 percent of UK SMEs have had to stop or an area of their business on hold because of a lack of finance over the last couple of years.
The most common activities affected by a lack of financing are hiring personnel, marketing, launching new products, expanding into new markets and R&D.
What’s stopping businesses from being able to get the cash they need? There are a range of factors cited in the research: 34 percent said that it was too expensive; 25 percent said that the process took too long, or that there was a lack of flexibility with repayment terms; 21 percent of SMEs blamed the fact that the lender did not understand their business.
At Swoop, of course, we aim to tackle all of these issues: giving customers the whole of the market to choose from – plus access to innovative borrowing products that are often better suited to a business’s needs – means that cost and convenience are taken care of. We help businesses find savings, meaning they need to borrow less (if at all) and there are several products that can put cash in your account in hours rather than weeks. For those with more complex needs, our account managers will take the time to understand your business and find appropriate solutions for you.
The good news is that the business owners surveyed said that they expect to see the most growth in sales, new market expansion and new product development in the next 12 months. And there is optimism out there: most SMEs believe they could grow their business by up to 29 percent in the coming year (in 2023, this figure was just 19 percent).
But only if they have the right support.
During Covid, one of the most useful programs for business was the Recovery Loan Scheme (RLS), in which the government acted as guarantor for a proportion of the loans made by banks to businesses affected by the pandemic.
As the danger has faded, so has the RLS with the terms being gradually watered down over successive budget statements. Interestingly, we often found that customers came to us to ask about RLS, and found a product better suited to their needs. Knowing that help is available, and that the government is ready to help, proved to spur many businesses to explore funding, whereas they might previously have assumed it wasn’t available for them.
There is clearly still a need for access to funding, and as both Conservatives and Labour made noises about the value of the SME sector to the economy, a replacement for RLS was announced just prior to the election.
Step forward, Growth guarantee Scheme (GGS), a finance facility aimed at SMEs with a 70 percent government guarantee to lenders on loans up to £2 million (£1 million in Northern Ireland). Unlike the RLS, businesses will NOT have to demonstrate that they have been affected by Covid if they wish to use it.
The new Labour government has pledged to reform the British Business Bank. The aim is to make it easier for SMEs to access capital and remove barriers to exporting goods and services.
At the time of writing, we are yet to get full details of how Labour will implement their pledge to support SMEs, though through the recent election campaign they have made all the right noises.
We will have to wait to see how much enthusiasm the new government will have for the Growth Guarantee Scheme, though with these numbers there is clearly a need for government backing to support businesses. Whether they rename or reframe it, we think it would be very surprising if they abandoned the idea of it completely.
We are already hearing from our lending partners that their GGS products are in the process of being approved (and may be live on the Swoop site by the time you read this). Given the popularity of its predecessor, we have high hopes that this new scheme will be a game changer for businesses that qualify.