Leader’s lens: Funding in a complex market

Q1. What are you seeing in the market right now when mid-market businesses come to you for funding support?

We’re seeing businesses facing a combination of pressures that aren’t always easy to manage simultaneously. Revenue growth has stalled for many either because volumes are down in certain sectors or because businesses are finding it difficult to push through price increases at the moment.

At the same time, costs are still quite high. Supply chains are taking longer and costing more than they did historically, and energy costs continue to create challenges.

What that means in practice is that businesses are increasingly turning to funding not just to grow, but to stabilise; whether that’s managing working capital, covering the gap between paying suppliers and receiving income, or simply creating the headroom they need to operate with confidence.

Q2. What are the most common reasons businesses are seeking funding today?

It typically falls into three areas.

First, growth funding. Often that can be through acquisition rather than purely organic growth. Businesses are seeing acquisitions as an opportunity to access new regions, sectors or product lines and accelerate expansion, or to bring about synergies through economies of scale.

Second, working capital support. Some businesses are facing pressure on their working capital, particularly driven by supply chain delays and rising input costs. Businesses often need funding to bridge the period between paying for goods and receiving cash back into the business.

Third, refinancing. This can be to reduce their overall cost of capital (often having taken on short term debt during Covid and looking to consolidate, or through taking on more pricey acquisition debt, or simply where businesses are performing better and therefore can attract funding from cheaper lenders) but it can also be where a bank’s appetite has been stretched and therefore an alternative lender is the better (sometimes only) option for the business.

Q3. How has the lending landscape changed for mid-market businesses?

There’s been a noticeable shift in recent years. Traditional high street banks don’t have the same appetite they once did, particularly where businesses are under pressure or operating in more challenging sectors.

What we hear frequently from finance directors is that they’ve had long-standing relationships with their bank, sometimes for decades, but are now finding those lenders less able or willing to support their current needs.

At the same time, the rise of alternative lenders and debt funds has been significant. There are now many more options in the market, often offering greater flexibility and additional headroom. That can come at a higher cost, but for many businesses, the trade-off is worthwhile if it provides the flexibility they need.

Q4. What role do you play in helping businesses secure funding?

Our role is to guide clients through the full funding process and help them access the right solution for their situation. That starts with working closely with them to understand their needs and build robust financial models and materials.

We then take those opportunities to market approaching a targeted group of lenders, which could be a small number or a much broader pool depending on the deal and run a structured process to generate and negotiate funding offers.

Crucially, we’re not just helping clients secure capital - we’re helping them ensure the structure is right. That includes negotiating commercial terms, advising on flexibility, and making sure the funding aligns with the business’s strategy going forward.

Q5. What risks should businesses be aware of when taking on new funding?

There are always risk when taking on debt, particularly in an uncertain environment. Growth may not happen as planned, acquisitions may not deliver the expected returns, and outside factors may change.

Where we most often see issues arise is not necessarily the funding itself, but the planning behind it. Businesses can run into difficulties if they haven’t properly modelled their cash flow, tested different scenarios, or agreed appropriate covenant structures with lenders.

In many cases, challenges that emerge 12 months down the line can be traced back to gaps in that planning process, particularly around forecasting and understanding how the business would perform under different conditions.

Q6. What practical steps should business leaders take before seeking funding?

The key message is to plan ahead and take a long-term view. Funding should be part of a broader strategic plan, not a reactive decision.

That means building a clear and well-thought-out financial model, stress-testing assumptions, and considering different scenarios including changes in interest rates or delays in growth.

It’s also important to recognise that not all funding needs to be permanent. In some cases, higher-cost or more flexible funding can be used deliberately as a short-term solution - for example, to support an acquisition or expansion with a plan to refinance onto a lower-cost structure once the business is in a stronger position.

Ultimately, the businesses that navigate this environment best are those that approach funding as part of a wider, well-planned strategy rather than a quick fix. Those that don’t plan often find themselves reacting under pressure, without having taken advice early enough to shape the right funding strategy.