The SME lending landscape – where we do stand?

This blog was written by Lee Humble, Corporate Finance Associate Partner

The lending landscape has moved exponentially during 2020, with Covid-19 and the resulting government response leading to sweeping changes in the structure and form of lending to UK SMEs.

Lending as we knew it has largely paused, retracted or fallen away in entirety, with lenders managing their risk exposure via a manipulation in their appetite to support new and existing customers. CBILS to that extent has been much needed, with government guarantees being the key stimulus behind this lending source. CBILS was initially intended as a six month scheme and we have recently seen the deadline for applications extended from 30 September to 30 November.

With significant uncertainty remaining across markets and secondary lockdowns underway this is good news for SMEs, with further cashflow strain in need of increased support via this lending format. Key for all business at present is the financial modelling of cashflow based on current known factors, and the modelling of scenarios which cover the key “Unknown’s.” The stretching of customer payment terms, contraction in customer demand expectations and layering in of bad debts are obvious scenarios which should be assessed, with any potential cash shortfall needing to be addressed.

Recent government announcements with regards to the winter stimulus plan may not provide the magic bullet to business issues, but they do provide some form of clarity and the extension to schemes such as CBILS should be acted upon with haste. The deadline will approach before we know it and the availability of lending beyond 30 September remains uncertain, albeit my view is that liquidity will remain limited in supply.

Any lingering insolvency risk is likely to crystallise and further lending appetite change is anticipated due to the emergence of the Crown Preference in December of this year. Robust cash and business planning is therefore vital, as will a broad assessment of funding options.

The best advice would be to act with pace and present your application as soon as possible to avoid any disappointment. Lenders have seen record levels of demand and with only several weeks to go it is essential you commence the process whilst you have the chance, and before your headroom begins to pose serious concerns.

Contact us

Our team have vast experience in this field and would happily assist any client or contact undertaking such an exercise. Please contact us at