8th December 2020

Optimum Finance Looks Ahead to 2021 with predictions for SMEs

After possibly the most challenging and tumultuous year for business in living memory, Optimum Finance CEO Anthony Persse looks ahead to the next 12 months:

  1. We’re already seeing the impact of businesses failing on the high street. 2020 has been the straw to break the camels back for some well-known household names – Debenhams and the Arcadia Group as examples. This will filter down to SMEs in specific sectors which have faced long periods of inactivity in sales during lockdown while still needing to meet overhead commitments. No amount of furlough can save all companies. ONS reports this pattern is likely to continue until the first half of next year with a peak in insolvencies traditionally seen each January. However, on the plus side many market analysts are forecasting a fast recovery.
  2. Emergence of new companies fuelled by innovation and ground-breaking tech. ‘Tech-celleration’ as it is becoming known is a positive by-product of the pandemic. While we might see traditionally structured British companies go to the wall, we will simultaneously see a rise in fast growth start-ups. Those with innovation at their core will fly.
  3. Cash flow pressure on SMEs will increase as government support comes to an end. It seems likely that the furlough scheme will actually end at the end of March. With the news of vaccine approval hot off the press, another three months of the scheme will give viable businesses the chance to focus on recovery. However, business owners should be paying very close attention to their incomings and outgoings noting the dates of corporation tax, deferred VAT and the start of repayments of any BBILs or CBILs government loans.
  4. The rise of alternative funding. So, the cynics amongst you might say ‘well they would say that wouldn’t they!’ But, joking aside, the reason this is a genuine forecast trend for 2021 is that we are already seeing the major banks’ reluctance to lend to small and medium enterprises and certainly, the options for start-ups are limited. Borrowing by SMEs will rise in 2021 and we will no doubt see increase M&A activity as ambitious SMEs look to structure deals to take advantage of commercial opportunities in their sectors. 

 For more information please visit https://optimumfinance.co.uk/