UK-based SME financing provider Bibby Financial Services (BFS) says it has established a £300mn pandemic recovery fund for new and existing customers as coronavirus lockdown restrictions in the UK begin to ease.  

The company says the fund will target businesses trading on credit terms who are seeking funding to grow as the economy reopens. SMEs will be able to access the funds through BFS invoice finance products such as trade and export finance variants, factoring, invoice discounting and construction finance.   

It says it expects most of the fund to be directed toward SMEs in the manufacturing, services, construction, transport and recruitment sectors.   

“We know the tremendous impact the Covid-19 pandemic has had on SMEs and supply chains across the UK over the past year,” says Ian Ramsden, the company’s UK chief executive. “However, with the vaccine roll-out underway and the UK government’s four-step ‘road out of lockdown’ plan underway, there is some light at the end of the tunnel for the economy.” 

“While undoubtedly government loans have been a lifeline for many businesses, SMEs should start to consider more sustainable sources of funding to coincide with the rebound of demand.” 

In addition to loans extended during the pandemic, the UK government has also offered businesses an employee retention scheme, financing facilities, grants and business rates relief.    

However, exporters have complained of difficulty accessing financing under the government programmes, arguing last April that the lenders were often unwilling to shoulder even greatly reduced credit risk through the Coronavirus Business Interruption Loan Scheme.  

The government has also made it easier for firms to avoid insolvency. Data released last week showed that the 992 UK insolvencies recorded in March were 20% lower than during March 2020 and 37% lower than the same period in 2019.  

But trade credit insurer Atradius said in a March 24 forecast that it expects UK business insolvencies to jump 56% year-on-year during 2021 as government support is wound back, putting the country near the top of the list of economies likely to see a growth in company collapses. Marsh, a major trade credit insurer, has also warned of an acceleration in insolvencies globally as businesses are taken off support measures.

BFS, which says it funded more than £6bn of business turnover last year, says its own polling of firms found that two thirds believe demand will recover to pre-pandemic levels by September this year and many want to invest in technology, hiring and staff training.  

A recent survey by C2FO, a working capital marketplace, found that the cost of working capital for SMEs has risen globally during the pandemic, and that late payment practices have climbed most in the UK, China and Italy.