Post-Brexit financing for SMEs

Brexit has taken the headlines for the umpteenth time since the referendum was voted on. With the scheduled separation of the United Kingdom from the European Union on the 29th of March 2019, businesses have been trying to quantify the impacts of the separation. This comes as no surprise, as Brexit represents one of the biggest disruptions over this generation and will potentially affect all UK businesses, regardless of size and industry.

While large corporations have an army of consultants and lawyers to prepare them, the same cannot be said of SMEs. We at Populous World believe that SMEs should take the initiative to delve into the potential impact of Brexit, and we will explore how Brexit can affect financing for SMEs.

In a macro lens, any negative impact from Brexit in terms of SME financing should be relatively contained, as a study published in the International Small Business Journal suggested that only 10 European banks were actively lending to UK SMEs.

This should not, however, be an excuse for business owners to not perform an internal review. It is important for SMEs to consider the impact and quantify the risks surrounding their finances in the wake of Brexit as financing for SMEs is definitely going to be impacted. With Brexit, EU funds may decide to reduce or discontinue financing British SMEs. This is further acknowledged by a joint publication from the Irish Business and Employers Confederation (Ibec) and Accenture, where a post-Brexit Britain, along with global volatility, may affect access to capital and EU funding.

In relation to SMEs, the European Investment Fund (EIF) guaranteed £100 million to finance SMEs in 2015, with plans of further transactions. However, if funds from corporations and bodies such as the EIF were to be removed post-Brexit, it is the local SMEs that will be feeling the pressure.

If your business is heavily reliant on funding from the EU, it is worth taking steps in mitigating any risks of financing problems or seek alternative methods of financing. There are many options such as term loans or flexible invoice finance facilities. SMEs can consider receiving the latter from the likes of Populous World where we prioritise our client’s need for flexibility with single invoice discounting to ensure our clients receive only what they require.

While there are still many uncertainties regarding Brexit, SMEs can adopt an active role in safeguarding their own interests by being flexible and ensuring there are a range of options in place.


Lou Chan, Populous World