Approximately forty percent of small and medium-sized enterprises (SMEs) were forced to halt or slow operations due to financial constraints, as indicated by recent findings.

Approximately forty percent of small and medium-sized enterprises (SMEs) were forced to halt or slow operations due to financial constraints, as indicated by recent findings.

In the current economic climate, the implementation of a permanent loan scheme could prove vital in sustaining the recovery of businesses and ensuring the survival of numerous companies across the UK. This assertion is backed by recent research, which reveals that Small and Medium Enterprises (SMEs) account for around half of all private sector turnover in the country.

The funding landscape for SMEs is diverse, encompassing traditional lenders such as banks and Sparkassen, as well as non-traditional players like Fintech companies, private credit funds, venture capital funds, and specialised platforms. Notable among these are iwoca, Deutsche Credit, M&G, VORNvc, NRW.BANK, and TenFifty Capital.

However, the research commissioned by Manx Financial Group also highlights a significant funding shortfall, with nearly one in seven SMEs unable to access the external finance they needed. This funding gap could have profound consequences for both SMEs and the UK economy, particularly during uncertain periods.

Douglas Grant, CEO of Manx Financial Group PLC, has called attention to this persistent issue, advocating for a government-backed, sector-focused loan scheme that would involve both traditional and non-traditional lenders. Such a scheme, he believes, could secure the future of SMEs.

The lack of finance has forced many SMEs to halt or curtail various activities, with marketing, expanding into new markets, hiring personnel, opening new offices or sites, and Research & Development (R&D) being the most common casualties.

Looking ahead, SMEs anticipate growth in sales, new market expansion, and recruitment over the next 12 months. However, concerns remain, with more than a quarter of SMEs expressing apprehension that their business will not grow at all in the same period.

The research also shed light on other barriers SMEs face in sourcing external finance, such as the cost being prohibitive, the process being too lengthy, and a lack of flexibility with repayment terms. Despite these challenges, the majority of SMEs believe they could grow their business by up to 19% with appropriate external finance.

In light of these findings, it is clear that the government should take steps to mitigate the impacts on SMEs, which are the backbone of the UK economy. By addressing the funding shortfall and fostering a conducive environment for SME growth, we can ensure a strong and resilient economic recovery.

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