Capify, the specialist SME lender, recently introduced a £40 million fund for UK-based small businesses in order to help with maintaining operations through challenging conditions.
The fund has been established in response to growing concerns regarding access to finance from traditional lending platforms and the overall impact that has on SME business’ ability to address the negative effects of inflation.
According to Capify’s Q1 2022 Confidence Survey, around 60% of SME owners are currently concerned about the impact of increasing costs as well as inflation on their business operations.
The survey, which reportedly included the insights of 260 SME owners from a range of areas and industry segments, uncovered the impact of inflation on cash flow and cash reserves.
About 37% of respondents said cashflow was a major issue (up 14pp from 23% in Q4 2021), meanwhile, more than half or 50% of survey respondents (53%) expressed concerns about the levels of cash in the bank.
Around 47% of respondents identify these working capital and cash flow issues as the primary driver for obtaining external finance. However, approximately 52% of those surveyed said that they would not be really confident of obtaining that finance from their traditional banking partners.
The fund intends to alleviate some of the cash crunch crisis and offer a lifeline for companies struggling with challenging issues.
The fund may be accessed by businesses aiming to invest in their operations and realize their long-term growth goals.
Funding of up to £500,000 could be offered to SMEs across a range of industries that are currently trading.
John Rozenbroek, chief operating officer at Capify, said:
“Our most recent survey presented a very stark picture of the UK SME landscape. Whilst many businesses were optimistic about their potential to grow sales and headcount, there was a real sense that access to finance is becoming an increasing concern. These underlying concerns will have been accentuated by this period of inflation and the attendant price rises throughout the supply chain.”
As was the case following the 2008 financial crisis, demand for finance from SMEs is increasing across all sectors.
“As we saw in that last great recession, traditional banks restrict their lending criteria in uncertain times and make it difficult for SMEs to get the finance they so desperately need. Our new fund is a specific response to this gap in the funding landscape. It underlines that alternative lenders like ourselves will have a vital role to play in helping SMEs navigate these headwinds and allow them to capitalise on future opportunities.”