As part of its most aggressive series of interest rate hikes in decades, the Bank of England has increased borrowing costs. Analysts predict that interest rates may reach a peak above 5.5% before Christmas.

The increase in interest rates has led to significant consequences for all businesses, particularly in managing their cash flow. With borrowing costs on the rise, banks have tightened lending standards, focussing on lower-risk lending such as mortgages. This has created a larger funding gap for small and medium sized businesses, leaving them highly vulnerable with limited access to capital.

The plight of small business owners is becoming a recurring topic in the news, with even the Wall Street Journal showcasing the struggles of a small ice cream shop. Based on strong customer demand, the owner of the shop had planned to expand her business, seeking to open a new location. However, the owner's bank could not provide her with the necessary growth capital for expansion, resulting in a cash shortage.

With reduced lending support, growing businesses like the ice cream shop face cash flow management issues. Unfortunately, the ice cream shop’s situation is not unique, as other entrepreneurs are also struggling due to cautious lending practices by banks. One possible solution is raising capital in exchange for equity in the business. However, employing this method entails relinquishing some ownership and control of the business. 

There is an alternative approach to overcome these funding challenges: Lenkie's dynamic credit facility.

SBL Couriers, a Lenkie customer, faced similar restrictive lending when approaching traditional banks for a loan. Through a simple 2-minute application process, and a decision within 24 hours, they were able to secure funding through Lenkie. Haris Attique, finance manager at SBL Couriers, hails Lenkie as their "secret to growth" in achieving a steady, positive cash flow. 

Lenkie’s credit facility enables businesses like SBL to pay supplier invoices instantly through a dynamic line of credit. These businesses choose their flexible repayment term - from 3 to 12 months - with one simple fee for each invoice spread. Using a credit facility to pay ongoing invoices frees up additional cash to grow the revenue of the business.

The facility is assigned specifically for growth. Businesses can use it as needed, without being charged for unused funds. With the Lenkie solution, small and medium sized businesses can access the necessary capital to propel their businesses forward with greater flexibility, without giving up any ownership stake.

Rising interest rates and restrictive lending practices from banks mean small and medium sized businesses are grappling with cash flow issues and limited access to capital. However, by finding the right funding option, small and medium sized businesses can achieve financial success, even in the face of changing interest rates.