Government support is a good start, but won’t alone save businesses this winter


By Jonathan Andrew, Global Chief Executive

02 Nov 2020

Businesses must look to external sources to finance survival and growth

Governments around the world have begun to outline their economic stimulus for the remaining months of 2020. It is clear that the precarious balancing act of keeping the wheels of commerce turning, while protecting populations is a huge endeavour, and a shared challenge.

There are clear nuances in government support available to SMEs across Europe, the Americas, Africa and Asia. There are also many similarities.

Data from the World Bank shows debt finance, employment support and tax measures as the three leading interventions globally. While there are calls from some financial corners for normal lending to resume, such significant fiscal measures can only be welcomed by all with the interests of small businesses at heart.

Such packages have been a lifeline for hundreds of thousands of SMEs. They demonstrate the vital role played by small businesses the world over in both employment and GDP.

Beyond government fiscal measures, there is essential support available in the private sector.

Extensions to such schemes have been necessary, and it is now time that bespoke support packages are designed for regions and sectors hardest hit by the pandemic, such as retail, hospitality and creative arts. Successful governments will be fleet of foot in dialling up and down stimulus needed at different times, in different industry sectors.

While central intervention is an important start, it cannot be seen as a silver bullet that will guarantee the survival of SMEs this winter.

Beyond government fiscal measures, there is essential support available in the private sector. From traditional bank sources and private equity to alternative financiers, it is time for the financial services sector to rebuild public trust lost during the financial crisis. Now is not the time for tribalism or silos. Instead, it’s an opportunity for SMEs to access advice, guidance and support to help them weather the storm, whatever the source.

To this end, SMEs are considering their options. As the number of permanent non-borrowers declines by the day, businesses are looking to external sources to finance survival and growth. Our own research shows this. More than two-fifths of SMEs in Netherlands and Belgium, and 70 per cent of Irish businesses are more likely to consider using external finance than they did prior to March.

As well as considering support available, businesses are taking matters into their own hands. Many have demonstrated incredible adaptability already, such as restaurants and retailers delivering directly to customers – often for the first time – throughout initial lockdowns.

SMEs are, by their very nature, at their best when they are leveraging the ecosystems in which they operate by networking, finding new distribution channels and using technology to market and sell.

Though travel restrictions, border regulations and economic uncertainty have made some businesses reluctant to look beyond their borders (and comfort zones) for growth, it’s the SMEs that revert to their entrepreneurial roots that will thrive during and post Covid-19.

Now is not the time view support in isolation. Rather, it is incumbent on the private and public sectors to come together, collaborate, and help SMEs to take advantage of every last opportunity to survive and thrive this winter.

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