At Carter Clark, we regularly work with both accountants and business owners who are exploring funding options. Whether you’re an adviser helping a client raise capital or a director navigating the lending landscape yourself, the journey to accessing finance can be complex. In this post, we summarise key takeaways from a recent ICAEW webinar hosted with Allica Bank, and add our own perspective on what to do when traditional lending isn’t available.
The Lending Landscape: What’s Changed?
SMEs are the backbone of the UK economy, but accessing finance has become increasingly challenging. Following years of disruption—Brexit, Covid, inflation, and international uncertainty—many SME owners feel overwhelmed and wary of taking on debt.
Banks have changed too. Traditional relationship managers are rare. High street branches have closed. And banks have focused their efforts on either mass-market retail banking or large corporates, leaving established SMEs underserved.
The result? A funding gap of over £95 billion in SME finance. Challenger banks like Allica are stepping into this space, but caution remains among many business owners.
Why SMEs Struggle to Borrow
Many businesses choose to grow slowly rather than take on debt. Common reasons for finance rejection include:
- Affordability concerns (insufficient profits or cash flow)
- Lack of security (particularly for unsecured loans)
- Overambitious or unrealistic forecasts
- Poorly presented or incomplete funding proposals
Too often, we see businesses relying on expensive, short-term solutions, such as credit cards. This may offer speed but often comes at a high cost and risk.
What Banks Are Really Looking For
Banks don’t lend on optimism. They look for well-prepared, evidence-backed lending proposals. Key elements include:
- Clear business plan and purpose for borrowing
- Three years’ financial statements and current management accounts
- Realistic forecasts with scenario planning
- Demonstrated ability to repay (EBITDA or cash flow coverage)
- Strength of management team, including succession planning.
Importantly, banks assess not only the financials but also the capability and track record of the directors. And while security is often required, particularly for larger loans, it is considered a last resort.
When the Bank Says No
Rejection doesn’t always reflect the viability of the business. Many strong SMEs are declined due to poor packaging of applications or timing.
This is where we come in.
At Carter Clark, we work with businesses who find themselves stuck between needing capital and facing limited access to traditional finance. If a bank is demanding a personal guarantee that feels too risky, or if the business has already been turned down, restructuring may be an option.
We also have access to a panel of specialist lenders willing to support sub-prime borrowers, including those with historic issues, impaired credit, or complex financial positions. We understand the funding market and can help clients secure finance where others cannot.
How Carter Clark Can Help
When bank finance is not an option, our experienced team can help directors explore alternatives, including:
- Informal restructuring or turnaround planning
- Company Voluntary Arrangements (CVAs)
- Time to Pay (TTP) arrangements with HMRC
- Accelerated M&A or asset sales
- Pre-packaged administration to protect the business and jobs
We are also proud members of the Turnaround Management Association and work regularly with turnaround consultants to help develop and implement business strategies. Our collaborative approach brings together financial, operational, and legal expertise to give businesses the best chance of survival and recovery.
We also help company directors understand their legal responsibilities and mitigate personal risk, including risks associated with personal guarantees.
Final Thoughts for Accountants and Advisers
If you’re advising SME clients, now is the time to have honest conversations about finance readiness. Ask the deeper questions: Is borrowing the right move? Is the business positioned to succeed with that borrowing?
And if borrowing isn’t viable, get us involved early. The earlier we’re consulted, the more options we can offer. We welcome introductions from accountants and are happy to offer no-obligation discussions with business owners to review their situation.
Get in Touch
To find out more about how Carter Clark can support your clients with funding alternatives, sub-prime lending options, and business restructuring, contact us today. We’re here to help SMEs stay resilient and move forward with confidence.
