What SMEs seeking finance during COVID-19 need to know

With the CBILS scheme ending next week, it will be more crucial than ever that SMEs can access financial backing from other sources.
General uncertainty along with the slow return to pre-crisis levels of economic activity has put additional cash pressures on mid-market SMEs and made strategic planning more difficult. To support and protect businesses in the short term, the Government has taken a range of pandemic funding measures, with £13.68 billion of CBILS investment alone approved for over 122,000 applications*. 

However, a 50% CBILS approval rate suggests there is a deluge of businesses that will need to look beyond government schemes or traditional bank lending to secure finance. With the scheme ending next week, it will be more crucial than ever that SMEs can access financial backing from other sources.

Alternative debt providers can offer a realistic solution, taking a holistic view of the business and its strategy, offering flexible loan investments that can be tailored for the medium to long-term. SMEs seeking this type of finance should consider the following areas to optimise their chances of securing capital investment.

Scout the funding landscape thoroughly

COVID-19 has created an unprecedented business environment, but despite this, alternative debt providers remain committed to supporting businesses to survive, adapt, grow, and capitalise on market opportunities created by the pandemic. The alternative debt market is well established and well served, with several regional providers able to offer flexible capital in situations that High Street banks will not. 

Importantly, many of these innovative debt solutions will have long-dated capital repayments, allowing directors time to focus on their company and not their funding obligations in the short term. Directors should seek out lenders with regional expertise and a pragmatic approach, as these qualities will ensure an investment partner that truly understands their business.

Plan for the long-term even in the short-term

The attraction of CBILS is that it offers affordable finance with short-term repayment dates, but this will not work for all business models, particularly those with longer-term cashflow cycles. Beyond the initial 12 months’ interest free, the sudden increase in repayments may just be delaying a business’ hardship.

The businesses that will successfully weather the COVID-19 storm will be those that have been 100 percent focused on putting in place strategic changes to secure their long-term future. MDs and FDs approaching alternative lenders for finance need to present such strategies, with comprehensive business plans to support a realistic long-term strategy.

Quality information is key

To keep applications moving swiftly, it is vital that the information provided to prospective lenders is complete, detailed, and transparent. Information such as 3-year P&L and cashflow forecasts, historical results, analysis of the COVID-19 impact on the business and a robust business plan, will all contribute to helping an Investment Director understand the opportunities faced by the business, and look past the impact of the pandemic.


For more information about FDC investments and pandemic funding, download our SME debt funding pack.

Image of SME Funding Pack
Information Pack


For more information about FDC funds available download our pack, or get in touch and we’ll answer your questions.