2021: It’s been challenging but there are reasons to be optimistic.

“We are coming off the back of the most challenging two years of my whole career. No recession or global financial crash this time, just a virus! The measures implemented by the Government to protect the futures of UK businesses provided invaluable funding at a critical time but the knock-on effect on the demand for other forms of finance outside of CBILS, BBLs and the RLS has been dramatic. That said there has been many opportunities for funders who stayed visible and kept the lines of communication open. We are proud of the support we provided to both existing and new clients throughout this time.

The announcement that the RLS would continue to the end of June 2022 caused an intake of breath across the sector, but the reality shows that only £1bn of RLS funding has been provided to 6,200 firms with only 80% of this drawn down. This compares to the £80bn of lending via CBILS and BBLS throughout 2020 and early 2021. A suggestion perhaps that the need for this critical funding is much reduced with businesses either relying on existing loans or cash reserves to fund their operations.

The business sector is facing many challenges but at the root of them is the knock-on effect of Covid on our lives as well as Brexit. Figures suggest that there is £170bn sitting in household accounts as our lives were curtailed and that this pent-up demand is resulting in spending at a faster rate than goods can be supplied. This is driving up prices and the reason why inflation is making the headlines. I do not think this is a blip and I believe we will be in an inflationary growth period for the next two years. I do see supply of goods improving over the next 6 months, but labour shortages will continue to impact our economy. We lost 3 million EU workers because of Brexit, and this is not an easy problem to solve. We all know the inclusion of EU workers in the UK have depressed wages in many sectors. As the hunt for talent gets tougher, wages will be driven up putting more pressure on firms to increase prices or seek out automation as a way of reducing the salary bill. I suspect interest rates will increase in the short term too!

With demand high, many UK SMEs are expressing optimism for the future and with expansion plans on the cards they may find that loans taken have dried up and payments are draining their cashflow and as such will be seeking funds to support this growth. As funders we need to ensure that they are aware of the wide range of alternative funding solutions available which may be more suitable to their business or the situation they find themselves in. Ensuring fast and easy access to these solutions is essential to help them keep plans moving and to support economic recovery.

But what of insolvencies? October, saw the lifting of temporary measures to protect businesses from the impact of the pandemic such as the ban on creditor statutory demands which means that there is increasing pressure on firms to pay their bills. The lifting arrives at a delicate time for the UK as it faces an energy crunch, supply chain bottlenecks, rising inflation, and the end of the furlough scheme. There is suggestion that the combination of these elements is likely to translate into a raft of insolvencies – In my view, the dangers of overtrading as the economy continues to recover could give rise to more insolvencies but only time will tell.

Invoice Finance remains an important source of funds with 35k businesses benefitting from £11bn of funding demonstrating the value that it can deliver to the UK economy. For our part, Advantedge are here and open to providing funding facilities to businesses seeking an injection of funds to grow their business”.