Small and medium-sized enterprises (SMEs) are the lifeblood of the UK economy – driving innovation, creating jobs, and shaping communities. Yet too many find themselves held back by a financial system that doesn’t always work for them.
Shawbrook’s latest research shows that nearly 80% of SME owners are worried about inflation and the cost of living. Three-quarters (76%) say the cost of running their business is a major concern, and more than half (56%) are worried about accessing the right funding. These challenges have been compounded by the rise in interest rates over the past three years, which has made the cost of borrowing more expensive.
SMEs face a tough balancing act: juggling higher operating costs, the impact of policy changes like the National Insurance Contribution (NIC) hike, and the pressures of managing day-to-day cash flow. Yet too often, the narrative focuses on the barriers rather than the solutions.
It doesn’t have to be this way.
Cash flow issues can feel like an inevitable part of running a business, but they are a challenge that can be managed – with the right financial partner. The reality is that many businesses don’t realise the full range of funding options available to them. SME finance isn’t just about term loans. It’s about solutions that fit the business: asset-based lending, invoice finance, revolving credit facilities, event-driven finance – tools that can smooth the peaks and troughs of cash flow and give businesses the breathing room they need to grow.
Specialist lenders have a critical role to play in this. We take the time to understand a business’s specific cash flow cycle, sector challenges, and growth ambitions – offering not just funding, but structuring expertise and long-term support. Many SMEs are willing to pay slightly more for this tailored approach, recognising that it often optimises the cost of borrowing in the long run.
But while lenders can innovate and adapt, the bigger picture needs attention too. Government has a role to play in broadening awareness of the funding landscape – helping SMEs understand where they can turn for support and creating an environment where businesses can access the right finance at the right time.
SMEs are a diverse group. They’re not a monolith or a ‘backbone’ – they’re individual businesses, each facing unique challenges and contributing in different ways to the economy. What they have in common is resilience, determination, and a need for funding partners who understand their world. By working together – government, lenders, and SMEs – we can ensure that businesses aren’t held back by cash flow challenges and can instead focus on what they do best: growing, innovating, and building a stronger UK economy.
