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Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 12/01/2021

Business lender Ultimate Finance, has published its predictions for business lending in 2021.
The expectation is a difficult 12-months ahead for many businesses. The withdrawal of Government grants, the start of repaying Government backed loans and difficulties accessing traditional finance such as overdrafts and loans will leave many businesses struggling.

Josh Levy,. CEO Ultimate finance said:
“My key prediction for 2021 concerns liquidity and specifically that access to liquidity will be a serious problem for SMEs. Cashflow and overall business liquidity is a challenge for all companies. The various Government support schemes – loans, grants and tax deferrals – have helped overcome the COVID pandemic related impact of reduced income and pressured cashflows. But going into next year, SMEs face being unable to access primary or traditional sources of working capital funding, whether that’s loans or overdrafts. This is where specialist lenders and asset-based lenders can be such a great option.
But the key is that liquidity is always there until it is needed most, and the value of liquidity cannot be understated. Liquidity enables businesses to trade through uncertainty and capitalise on opportunities for growth. Thus, access to capital, closely watched working capital management and strong credit control will be key ingredients for success next year and beyond, particularly in an uncertain trading environment. Don’t assume that just because liquidity is there today that it will be there tomorrow.”

More than 100,000 retail employees already affected by pandemic

The coronavirus pandemic is expected to result in the highest number of insolvencies seen in recent history. Retail has been amongst the worst hit sectors with trading heavily disrupted due to COVID-19 lockdowns and restrictions. The Centre for Retail Research showed the number of retail firms failing in 2020 was 54 up on 43 seen in 2019. A staggering 109,407 employees have been affected due to the closure of these firms more than double the number seen in 2019. These losses have occurred while government support was still in place. The expectation is that as this support is withdrawn, firms may find their cashflow heavily squeezed, especially if mainstream lenders reduce their availability of lending. If businesses have reduced access to overdrafts and loans, the expectation is flexible funding solutions like invoice finance will increase. This uses the invoices of the firm to raise capital against.

Lawrence Wood, Group Head of Credit, Ultimate Finance commented:
“With continued economic uncertainty, the prediction is that the global COVID-19 pandemic could result in one of the largest waves of insolvency in recent times. Despite the Government support initiatives there will be an unquantifiable high number of businesses entering some form of insolvency during 2021. For many of these businesses that were pre-Covid both profitable and viably successful the sensible option will be to consider a pre-pack administration or Company Voluntary Arrangement (CVA) to which we expect to see a record number coming through next year.
Many previously robust and well performing businesses are now fighting to survive and with a gloomy economic outlook, all parties need to cooperate; the struggling SME itself, creditors, Government, the Banks…..all have a part to play and must be open in approach and view.”

Ultimate Finance have also stated that the percentage of businesses seeking funding or are open to this has increased during 2020 from 24% to 38% at the end of the year. The alternative business lender predicts this will rise to 50% by the end of the first quarter in 2021.

Businesses can find out more about different ways to support their cashflow in 2021 by speaking with our preferred invoice finance broker or preferred asset finance broker.

There is more information also available in our guide to the Coronavirus Business Interruption Loans Scheme (CBILS).


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