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08 Jun 2022 / Loans

Commercial Loans: Keeping businesses moving

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It’s no surprise that businesses are feeling more uncertain than ever. With everything that’s happening in the wider market – from rising energy costs to interest rate hikes, inflation, supply chain disruption –an astonishing 76% of SMEs and financial intermediaries are predicting that the UK will fall into a recession later this year*. For many, the outlook will only worsen if they don’t seek support soon.

The previous two years have taught business owners to be more resilient in times of turbulence and to act swiftly where possible. Already, we’re seeing that companies are beginning to make major sacrifices in order to combat and manage the greater cost of doing business, getting themselves as ready as they can be, for the next few difficult months. According to our research, 91 percent of business owners are increasing their own costs, with some increasing their prices by up to 30 percent. Without this cost increase, one in five businesses said that they would be unable to proceed with their investment and expansion plans, and one in ten would see their business’ outputs diminish as they saw themselves unable to supply the same number of products as before.

All that said, simply increasing their own prices doesn't appear to provide them with the magic bullet solution they desperately need to navigate their way out of the cost of doing business crisis. After speaking with these companies, we discovered that their primary fear was that an increase in costs would make it more difficult for them to maintain their position as a competitive option for clients. As a result, over half feared that their new business levels and turnover in 2022 would decrease.

In times of economic unpredictability and concern, it's our responsibility as funders and trusted advisors to maintain a high level of confidence and help keep businesses thriving. Due to the fact that SMEs account for 99 percent of our economy, it's clear to see why their survival and contribution to the larger market is essential. Growth is stifled if companies do not have access to sufficient cash or the financial flexibility necessary to cultivate innovation and develop. This not only manifests itself as companies pulling out of markets, but in certain instances the situation is far more dire, and those companies are no longer able to survive.

That’s why it’s vital they find the right level of funding that not only gives firms the cash injection they need, but also peace of mind. Our own research finds that, like us, financial intermediaries, predict flexible funding solutions such as Commercial Loans will play a prominent role in leading business recovery this year.

In fact, when asked what funding solution business owners would likely turn to in the next 6 months, 88 per cent of financial intermediaries ranked Commercial Loans at the top of that list. This was followed closely by Asset Finance to support investment in essential pieces of business equipment, which was highlighted as a key funding option by 82 per cent of intermediaries. Other options included relying on existing cashflow, overdraft facilities and Invoice Finance.

There’s no doubt that those firms who already benefit from Commercial Loans do so because of the healthy facilities available, their swift set up and easy access. It makes this finance option a no brainer for firms looking for a cash injection that supplies peace of mind and headroom for future growth. But when it comes to supporting a business, of course, there are a number of other financial solutions out there that might be more appropriate for their circumstances and it’s pleasing to see the likes of Asset Finance and Invoice Finance not too far down that list.

It’s important that those options are considered and presented to clients so that they are able to receive the right funding support from the outset. This is one of the core reasons why Time Finance offers a broad portfolio of solutions – from Asset Finance, to Invoice Finance, Commercial Loans, and Vehicle Finance. It means that despite the challenges or opportunities lying ahead, we can help keep businesses moving.

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