Corporate Lending: How Scottish SMEs can create value in their business and weather the economic storm

With the economy shrinking and a long recession projected, how can SMEs continue to thrive and reach their goals, even through the tough times ahead?

Get lending support from a specialist funder to help your SME thrive
Get lending support from a specialist funder to help your SME thrive

There are currently over 300,000 SMEs across Scotland, proving that the small and medium enterprise sector plays a vital role in the Scottish economy.

Unfortunately, due to the current economic climate, SME confidence has taken a hit - with a recent study by Facebook owner, Meta showing that a quarter of small Scottish companies fear that their firms may close in the next six months.

However, despite the challenges there’s still plenty of opportunity, and with resilience and the right financial support, businesses can still thrive.

Here David Cayzer, Director, Scotland, Corporate Lending at Shawbrook explains how SMEs can use their assets to increase liquidity and help them be agile enough to weather the storm.

Unlocking value in your business

During an economic downturn, it is not uncommon for business owners to look to create or increase liquidity and one way they can do this is by leveraging their assets to help them realise value.

This can be achieved through an Asset Based Lending (ABL) solution, which can unlock value to provide both immediate cash and on-going financial headroom to support a range of important business milestones. An ABL structure can provide certainty and put the customer in control by allowing them to only draw funds when required.

At Shawbrook we provide flexible ABL options, including multi-asset revolving working capital facilities which can include Receivables, Inventory Finance, and a combination of other assets. We also offer multiple option, term debt funding packages which can include combinations of Property Finance, Plant and Machinery Finance, and Cashflow, in amortising and interest-only structures.

Exit options

For many Scottish SMEs recession and rising inflation can also cause uncertainty around business value which can delay or restrict exit options.

At Shawbrook, we offer a range of cashflow lending options, which can support succession and enable exit plans such as Management Buyouts (MBO), partial exits, and Employee Ownership Trusts (EOTs), which are becoming increasingly popular.

Shawbrook recently helped a haulage and distribution firm in the Northwest of England, complete a MBO with an eight-figure bespoke funding solution. The company, H &M Distribution Group, had been preparing for the MBO for nearly five years and while the social and economic backdrop has altered dramatically over that time, it was able to see it through to completion due to the team at Shawbrook providing the client with a hybrid funding package, including a working capital facility.

Remaining creative and flexible

It’s possibly more important than ever to be flexible and creative when it comes to finding the right solution for a company.

At Shawbrook we prioritise building relationships with our customers, their management teams, and advisors - getting to know every aspect of the business and understanding its objectives. When we combine this with our sector and regional expertise, we’re able to tailor the right finance package for each individual business, whether that incorporates ABL, Leverage Finance or a Hybrid Senior Debt solution.

It is this purpose-led approach that can help customers achieve their goals, even during these periods of uncertainty.

In H1’22 we’ve supported a number of companies across a range of sectors in Scotland and the North of England, providing £129m of funding to help them navigate pivotal events. So, despite the difficult economic outlook, with the right advice and support from a trusted lender, reaching your full potential as an SME business is still very much a possibility.

To find out more about how Shawbrook could help your company, click here.