How hassle-free flexible borrowing and cash flow solutions support SMEs

Jerome Fernandez

Managing Director of FlexiPay at Funding Circle

Small businesses continue to face economic challenges. However, their resilience should not be underestimated — and support is available to help them manage cash flow.

Recent years have been financially tough on everyone — that includes small and medium-sized enterprises (SMEs). World events, political uncertainty, rising inflation and supply chain issues have made a disruptive economic environment even more challenging for SMEs.

Borrowing costs and cash flow concerns

The latest Impact Report from the UK’s leading small business lending platform Funding Circle found that small businesses were still navigating choppy waters in 2023. Although inflation fell to 4% in December (from a high of 11.1% in 2022), the UK slipped into a technical recession in the fourth quarter of 2023, and the Bank Rate increased, pushing up borrowing costs.

“Cash flow is an ongoing problem for SMEs,” says Jerome Fernandez, Managing Director of FlexiPay at Funding Circle. “About 14% of them identified it as a major barrier in the third quarter of 2023, up from 11% at the start of the year.”

This turbulent environment calmed slightly this 2024, but the latest SME Finance Monitor highlights ongoing challenges, including rising costs, economic conditions, late payments and finance access.

When asked if they had plans to grow, the percentage of SMEs that said ‘yes’ was almost half.

Increased resilience fuelling ambitions for growth

That said, Fernandez is optimistic that UK small businesses can ride out the financial storm. “Although SMEs have faced challenges over the last few years, they have a resilient mindset and will continue to adapt and thrive,” he says.

Indeed, the Impact Report highlighted that SMEs are showing increased resilience and signs of optimism when looking at medium-term growth ambitions. “Over three quarters felt that the economic challenges they faced during the year increased the resilience of their business,” says Fernandez. “When asked if they had plans to grow, the percentage of SMEs that said ‘yes’ was almost half.”

Flexibility to manage cash flow challenges

Despite positive feedback, Fernandez admits there is a way to go until SMEs are firmly back on their feet. “For the rest of 2024, we think cash flow will remain a challenge,” he says. “But with access to a flexible line of credit through FlexiPay, business owners can pay for business costs upfront and spread their repayments over 3, 6, 9 or 12 months, helping them to better manage their cash flow.

“We’re always speaking to small businesses across the UK who typically face greater difficulty in accessing finance through traditional channels — to find out what their pain points are and how we can help them with the funding they need to succeed.”