Small firms could struggle to survive as lenders turn their back on their attempts for funding in the wake of the pandemic, a group of business experts has warned.

A group of leading professionals and CEOs, representing law firms, accountants, investment managers and UK businesses made the gloomy warning during a debate into the aftermath of the health crisis .

Chaired by Kathryn Paisley, partner and head of corporate at law firm Rix & Kay, which has offices in Ashford and Sevenoaks, the group agreed whilst both banks and private equity investment were active, smaller SMEs were not typically viewed as attractive for lending and investment, particularly at the lower end of the market, with banks remaining conservative and private equity “awash with cash” but often “not interested in writing a cheque for less than £5 or £10 million”.

As a result of the potential funding vacuum, the group concluded a secondary market needs to emerge which couuld prove pivotal to the longer-term sustainability of smaller SMEs.

Among those involved in the discussion were representatives from the Institute of Directors, accountants and business advisors Kreston Reeves, asset managers Hurley Partners, investment company BGF, infrastruture firm the Quattro Group, plus accountants Beavis Morgan and Lubbock Fine.

It has published a report following the debate, entitled What is Ahead for UK Business - Critical Planning as the Pandemic Unfolds.

Among a host of key issues, it warns the pandemic has led to greater tensions in the boardroom with management teams becoming divided on how to move forward. Some wanting to invest to “protect the business and realign for the next generation”, whilst less optimistic individuals want to find a way to exit relatively quickly. As such, “board decisions are becoming more cautious, short-term and pessimistic” because of people leaving.

To obtain a full copy of the report, email scottgarner@rixandkay.co.uk.

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