Unrelenting uncertainty. Winter lockdown. Post Brexit trading tempest. It’s impossible to overstate just how hard SMEs have been hit. Yet their harsh reality recently resulted in a magnificent injection of capital. Progressive venture capitalists and innovative financial providers stepped forward with bold strategies designed to rescue SMEs across the UK from further financial catastrophe.
Surveys conducted in late 2020 confirmed harrowing statistics. As of the end of September 2020, 234,000 SMEs permanently closed their doors. Since then surviving SMEs are working round the clock to adapt.
Innovation: new normal
Fellow SME and forward-thinking financial provider Liberis surveyed 200 of their SME customers to discover more about their Covid-19 experience. Half confirmed they were forced to permanently close their doors. 35% said their immediate concern was lack of capital because traditional funding is increasingly difficult to obtain.
Liberis CEO, Rob Straathof, commented: “As an SME ourselves, we understand the plight and have survived an economic downturn. With uncertainty in the market, funding can be hard to access from more risk-averse situations. We are thrilled to have extra resources to help our partners support SMEs’ survival through Covid and beyond.”
The “extra resources” he mentions is financing totalling £70M, to invest back into struggling SMEs.
Revenue-based: financing reimagined
£70M is the result of an ingenious financing funding drive. Investors are longstanding Liberis associates British Business Investments, BCI Europe and Paragon Bank as well as new associates Silicon Valley Bank (SVB). Including this £70M, Liberis has raised £200M in venture capital so far.
“These partners integrate with Liberis to offer up to 1m SMEs personalised pre-approved revenue-based financing for up to £300,000. Payments are linked to a company’s transactions, enabling them to pay for the funds more comfortably, in line with income”, a Liberis press release stated.
Alternative financiers Outfund recently announced £37M total from a seed round. Outfund partnered up with Fuel Ventures, TMT Investments and Force Over Mass.
Digital solutions usher in digital future
The combination of skyrocketing demand for online shopping and the onset of a golden retail quarter create the ideal opportunity for SMEs to reinvent themselves. The catch? Most SMEs need to grow their online presence first, and that includes marketing, supply chains, the lot. Traditional financing is proving unviable, either with bloated compound interest rates or ineligibility beyond the relative comfort of government grant safety nets.
Filip Coen is a Partner at Force Over Mass. He said, “Outfund provides SMEs with the short term financing options they deserve: fast, flexible and on good terms. A modern, digital-first credit provider with automated credit and risk scoring, managed by an exceptional team.”
Outfund has committed to deliver over £100m in revenue-based financing. The funds will help over 5,000 SMEs over the next year. And this is just the beginning. Outfund has set its sights on diversifying into revolving credit, company growth and working capital.
Outfund offers a streamlined process. Company directors are invited to apply using the straightforward application on Outfund’s website. There is no requirement for submitting business plans. Applicants are required to connect revenue accounts. From there, Outfund creates a funding proposal. The funds are released the same day.
Any SME that has been in business for 6 months, makes £10,000 (minimum) per calendar month, and accepts online deposits may wish to explore the Outfund website. Outfund may release revenue-based funding from £10,000 to £2m.
