Extreme pressures of inflation, soaring cost of living, and escalating energy expenses have emerged as formidable challenges for Small and Medium-sized Enterprises (SMEs) in the UK. These economic factors have amplified operating costs, diminished consumer purchasing power, and created hurdles in securing necessary financial support.
The fact that SMEs can turn to business process outsourcing when they cannot afford to hire more employees to do the jobs is a huge comfort for them. Not just that, when debt collection seems to be a major hurdle for up-and-coming businesses, many of them rely on bpo collections for improved cash flow.
Despite the formidable challenges, the resilient spirit of startups continues to thrive, positioning them favorably within the ever-evolving UK business landscape. With government-backed and third party loans, as well as incentivized programs focused on backing SMEs, the UK economy continues to foster an environment where relatively small businesses can seize opportunities, promising a future that brims with innovation and growth.
British Gas Announces £15 Million SME Support Fund
British Gas is demonstrating its ongoing support for British businesses by allocating a £15 million fund to provide grants to small establishments, including pubs, cafes, restaurants, hairdressers, shopkeepers, and charities.
To date, the company has distributed £7 million in support across over 4,000 business customers. A majority of these grants (74%) have been directed towards high street enterprises such as sole traders in retail, bars, restaurants, and community services.
Numerous businesses are currently grappling with heightened cost pressures, due to being locked into contracts established during a period of peak wholesale costs. Moreover, these businesses are now receiving less government support through the new Energy Bill Discount Scheme compared to the previous scheme.
In addition to the grants, British Gas aims to support select businesses by providing them with the opportunity to extend their current contract term by an additional 12 months. This extension, referred to as “blend and extend” contracts, aims to substantially reduce current rates, providing businesses with the opportunity to spread costs over a more extended period.
Businesses that are eligible for grants or new contracts will be contacted directly by British Gas in the coming months, removing the need for them to take any additional steps to apply.
British Gas has already established a support package worth £50 million, which has been instrumental in providing grants of up to £1,500 to residential customers in need since the onset of the energy crisis.
Alternative Funding Sources Becoming a Go-To for SMEs
In an ongoing tough lending environment for SMEs, high street banks are showing less interest in funding small business loans, according to a survey conducted by Iwoka. As much as 77% of brokers have observed this trend, while 39% reported an increase in loan rejections in the past quarter. This situation is opening up new opportunities for alternative lenders, including peer-to-peer lending platforms, to fill the gap left by traditional banks.
Moreover, SMEs in the UK are displaying renewed confidence in the economy, as concerns about an impending recession have reached their lowest level in a year. Iwoca’s research revealed that during the first quarter of 2023, only 63% of brokers reported their SME clients expressing concerns about a future recession, down from 77% at the same time last year. This positive sentiment, coupled with the challenges in securing loans from traditional banks, is likely contributing to SMEs exploring alternative funding options.
As interest rate rises are reaching new heights, it’s only natural that small business owners would look for other sources that offer lower interest rates and other added benefits to loan the money they need in order to go forward.
