Business confidence is at a four-year high as the country finds its feet following the end of lockdown, but there are dark clouds gathering on the horizon. To turn this optimism into concrete growth and overcome any challenges, SMEs have to be organized, including in terms of financial planning and managing cashflow.

News from Lloyds Bank shows business confidence is at a level not seen since 2017, with its confidence index rising six points to 36% in August. The upturn is being fuelled by the comprehensive vaccine rollout, the removal of restriction measures and the return of employees to offices and other worksites.

At the same time, the latest Manufacturing Barometer is showing healthy performance by the manufacturing sector, with trading now passing pre-pandemic levels for many firms. This comes as GDP rose by 4.8% for the second quarter of the year. There is also news that the number of new businesses being created is spiking following the move out of lockdown.

Post-lockdown challenges and how SMEs can tackle them

These figures all paint a positive picture of the road ahead for SMEs, but there are also some notable bumps for firms to contend with. Generally, businesses are increasingly having to deal with staff shortages and having to increase pay to attract employees.

This shortage is having a knock-on effect on supply chains and stock levels, with businesses running low on key products (milkshakes at McDonald’s and chicken at KFC are big-business examples) and manufacturers having to manage the impact of a lack of raw materials and rising transport costs.

So, while it encouraging to see that the economy is rebounding and many businesses are generally more positive and posting good performance, there are clearly obstacles to overcome in the short term.

If SMEs want to achieve sustained growth, they have to be prepared to manage the impact of staff shortages, pay increases and higher raw material prices on their cashflow and day-to-day operations. To do so, their financial planning has to be comprehensive and flexible. And this is where the services of alternative lenders can help.

Post Covid-19 growth and how alternative lenders can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic, services such as invoice finance, asset finance and peer-to-peer lending, are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme (open until the end of 2021). Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Navigating the post-Covid-19 market and SME finance options

The importance of good news shouldn’t be underestimated but for SMEs to turn confidence into growth, they will have to navigate the choppy waters of the post-Covid-19 marketplace. Awareness of all the financial options available will be crucial to doing so, including the range of alternative finance facilities.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.