Small businesses are still seeking finance in spite of Brexit
“Confidence was badly affected by uncertainty in the lead up to the referendum vote but responses submitted after the event indicate that belief in the economy and business fell off a cliff” explains Guy Rigby, head of entrepreneurial services at Smith & Williamson.
SMEs have been left stumped in the aftermath of the Brexit vote. Despite Theresa May being appointed to No.10, there’s still plenty of questions that need to be answered regarding what Brexit means for business. According to The Smith & Williamson Enterprise Index confidence that the economy will continue to grow among SMEs fell by 30%. Prospects for their own growth also slumped by 27%.
Commenting on these findings, Guy Rigby says, “Only a third of respondents were optimistic about their prospects after the referendum; a decline of nearly 20 points since the last quarter. Furthermore, only 15% of business owners and entrepreneurs expected the economy to improve in the post-referendum landscape, a further decrease of 13%.”
However, a jointly commissioned survey for the British Chambers of Commerce and Bibby Financial services revealed that 47% of SMEs were still seeking finance. This can be seen as an indication that just under half of SMEs are positive about potential growth opportunities following Brexit. But, another finding from the survey shows that SMEs are still largely unaware of the alternative finance options available.
“At some point in the life cycle of a business, access to finance becomes critical to supporting expansion and export plans,” stresses the Acting Director General of the British Chambers of Commerce, Dr Adam Marshall. “The low appetite for finance revealed in this survey, which was undertaken before the EU referendum, is concerning because it implies that many firms were treading water and putting off expansion plans well before the high-profile campaign we’ve seen in recent months.”
What these findings show is the necessity for greater support and guidance among SMEs seeking finance. Although there’s resources being produced to promote alternative finance solutions, the government needs to take a more active role in promoting the existence and viability of such options. This is especially important given the current economic atmosphere with tumbling oil prices and the Brexit aftermath.
“Traditional sources of funding still seem to be the first port of call for many SMEs” says the Global Chief Executive of Bibby Financial Services, David Postings, in response to this lingering issue. “But there are a growing range of options available and it’s important that businesses consider forms of finance that fit their requirements.”
To expand on this he goes on to say that, “At a time of change for the UK, there’s a fantastic opportunity for SMEs to achieve growth by looking beyond traditional channels for specialist finance. Sources of funding such as invoice finance grow in line with a business’s sales ledger and this means that SMEs don’t have to take on debt. Furthermore, a weaker pound provides opportunities for businesses selling overseas so export and trade finance may be better suited than loans or overdrafts.”
One of the industries benefiting from the pound weakening by 13% is the UK tourism industry. London is seeing a massive boost in visitors from Europe and beyond taking the opportunity to make their money go further. From America alone, there’s been a rise of 30% and Brits are opting to stay in the UK, adding a revenue boost to other parts of the UK. For those in the hospitality industry seeing the benefits, now might be a great time to consider your finance options and expand your business to cope with demand.