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In the aftermath of the Covid-19 pandemic and Brexit, businesses are continuing to face challenges such as inflationary pressures, supply chain disruption and escalating input costs. These challenges may involve considerable uncertainty for your firm, your customers, and your business model, so it’s important to prepare for any arising difficulties.
Access to finance is only one of the issues you may have to work through, but it is important to consider any funding requirements early on.
Banks and finance providers stand ready to support viable businesses and there is a wide range of advice, guidance, and finance options available to you.
For data on access to finance amongst SMEs, please see the SME Finance Monitor.
This guide is a starting point for businesses looking for assistance. UK government advice for business owners can be found here.
The SME Finance Charter sets out a series of commitments made by banks and lenders to provide small and medium sized businesses with the support and access the finance they need to grow and withstand economic challenges. The aim of the Charter is to let you know how UK lenders in general plan to support their business customers, what this means for your business, whether your lender has signed up to the Charter; and how other lenders are responding, so that you can compare.
The Charter sets of out five pledges for banks and finance providers to:
Signatories provide more detailed information about the support they offer on their webpages. The Charter and its signatories can be found here.
Resources for women-led businesses
The Investing in Women Code is a commitment to support female entrepreneurship in the UK by improving women’s access to the advice, resources and finance needed to build a business.
Resources for ethnic minority led businesses
A thriving economy needs to build on the talents of all entrepreneurs regardless of ethnic heritage, race, religion, or nationality. However, business owners who are Black, Asian or from another ethnic minority background can often struggle to find funding for their business. You can read about the financial services sector commitments and activities lenders provide to support ethnic minority business owners here.
The road to net-zero
Every business has a role to play in tackling the impact of climate change by reducing carbon emissions. It is the right thing to do but also makes good business sense. UK Finance and its members are committed to supporting businesses through the provision of advice, support as well and access to finance where appropriate. Read this guide from the CBI and UK Finance to help you get started on planning what you need to do to reduce carbon emissions and whether you should consider using external finance.
Opening a business current account is an important step for any business. To help you prepare, providers of UK business banking accounts have agreed a basic set of information that they will need from you. Please see this guide from UK Finance that includes all the essential details and documents you’ll need to open your account.
This guide applies to any new or existing businesses that:
Are based and operate in the UK – including your business owners.
Lenders retain the capacity and commitment to support viable businesses, so you should feel confident in approaching your finance provider, or others, if you wish to discuss finance needs. It’s best to do this as early as possible.
Figures show that banks approve around eight out of ten applications for SME finance.
If your primary lender cannot provide the finance you have requested, remember there are many alternative options at this stage and another lender may be able to support your business. There is a wide range of finance providers and types of finance. See here for the British Business Banks’ guide to other forms of finance.
The government also has a wide range of finance and support schemes available for businesses. Find out whether you are eligible for any schemes here.
It is important to remember that banks have an obligation to lend responsibly and there are times when a proposal does not meet a bank’s lending criteria, for example due to affordability or past credit history. In some cases, providers may make an offer that is different to the amount and type of finance applied for, which a business then chooses not to accept. In other cases, there might be other types of finance that are more appropriate to the circumstances of a business, whether these are provided by a bank or another finance provider.
These are the steps your business can take if your bank lending application is unsuccessful:
1. Appeal If you’ve applied to your bank for finance and you have been turned down, you can lodge an appeal on the Better Business Finance website. You must submit this within 30 days of your original application, and you will need to meet certain eligibility conditions as explained on the website.
The following banks are part of the appeals process: AMC, Barclays, HSBC, Lloyds Bank, Bank of Scotland, TSB, RBS, NatWest, Santander, Ulster Bank, Bank of Ireland, Danske Bank, Clydesdale Bank, Yorkshire Bank and First Trust Bank.
2. Referral to Government Designated Platforms If a small or medium sized business makes an unsuccessful loan application to a designated bank, the bank is obliged to offer the business a referral to the government-designated online finance platforms, subject to eligibility. These platforms aim to help firms find a suitable finance provider that may be willing to offer the required finance.
3. Finding Finance Tool If you’ve been unsuccessful in applying to your bank for finance you could try the Finance Finder on the Better Business Finance website. This tool brings together a wide range of finance providers across Britain, including business angels, regional funds, government schemes and banks.
4. Responsible Finance providers If your business needs a simple and affordable loan and your bank is unable to help, try a responsible finance provider. There are responsible finance providers all over the UK, lending to businesses, social enterprises (and individuals) providing finance that is fair, support and advice. Find your nearest responsible finance provider at http://www.findingfinance.org.uk/.
My cash flow has been or may be disrupted, what should I do?
Businesses concerned about cash flow issues should speak to their financing provider(s) as soon as possible to discuss what products and support may be available. These options may vary depending on your circumstances but could include for example applying for or extending an overdraft, a working capital loan or other sources of finance such as invoice finance.
It might also be sensible to consider payment practice more broadly, for instance whether your payment terms are still appropriate, whether they are clear enough and whether you should consider tools such as the Small Business Commissioner to take action against poor payment practice of your customers.
Invoice finance allows businesses to use the debts owed to them by their client businesses (as represented by their invoices) to release funding immediately instead of waiting for payment. Invoice finance can usually unlock around 85 per cent of the value of an invoice straight away, with the balance (less the financier's fees) paid when the invoice is settled. In addition to invoice finance, asset-based lending can release funding against wider assets, including stock, inventory, work in progress, plant, and machinery.
Many invoice finance providers will also provide sales ledger management services and can support clients in making sure that they get paid. In addition, bad debt protection can be provided, as well as funding or invoice finance, which can complement a client’s existing trade credit insurance facility, unlocking working capital and helping clients manage their payment risks and do more business. See here for more information.
SMEs play an important role in achieving net zero and will need to prepare for a more sustainable economy as the UK Government has committed to the Climate Change Act which will see the UK achieve ‘net zero’ carbon emissions by 2050.Here are some steps your business can take to start reducing your carbon emissions and finding the right finance solution for any investment need:
You don’t need to change everything at once. A step-by-step approach may feel more manageable
For more information on taking climate action, see ‘Finance green: a guide for SMEs’ here.
Export trade is critical to the UK Economy. The value of UK total trade in the 12 months to the end of August 2022 stands at £1,533.2 billion (Source: ONS). The thought of international trade can be intimidating – especially if you’re a new or inexperienced importer or exporter. Unfamiliar procedures, rules and paperwork can all feel challenging.
But there is a lot of support and advice available to help you take first steps through to successful international trade.
If you are thinking about exporting goods and services overseas, visit the government’s step by step guide on Exporting goods from the UK.
The Department for International Trade also has an advice page that can help on, for example, how to draft an export business plan and finding an export market.
Additionally, many business trade associations have dedicated export support services, so check these out.
As always, in you decide to go ahead and start exporting or expand into new countries, speak to your lender. Many lenders also have dedicated support services.
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