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Mental health and SMEs: supporting businesses during lockdown

Author: ICAEW Insights

Published: 08 Mar 2021

NEL Fund Managers has been working with small businesses in the North East for over 30 years. Yvonne Gale, CEO of the organisation, tells us what it’s been like working with smaller companies during the third national lockdown.

“The mental health of small business owners has taken quite a battering, and it's clear that resilience is a key issue,” says Yvonne Gale, chief executive officer of NEL Fund Managers Limited, which provides funding for entrepreneurial businesses in the North East of England who are looking to grow and develop. “Amid this third national lockdown, it’s about whether or not small business owners can pick themselves back up again and keep going.”

NEL has made more than 900 investments since being established in 1989, ranging from conventional loans to more complex arrangements to support businesses that would otherwise struggle to secure financing. It works closely with the small business owners that it provides funding to, maintaining regular contact and post-investment support – and even more so during COVID. 

“We have found that every time a new lockdown or a new tier is announced, the phone rings hot,” says Gale, who is a chartered accountant and ICAEW member, as well as being a non-executive director for the Office of Small Business Commissioner and a non-executive board member for the North East Local Enterprise Partnership. “Every time something like that happens, we'll spend all week on the phone to people, just trying to work out a plan, trying to get them to think carefully and rationally.”

“Small businesses, clearly they often don't have the HR infrastructure behind them, and it's long known that the people who lead those businesses often feel very isolated and alone. The personal burden is huge.” 

Research released by charity Mental Health UK in February 2021 warned that the COVID-19 pandemic had led to a deterioration in mental health for many small business owners. It found that over one third (35%) had experienced panic attacks and half had experienced symptoms of depression since the pandemic began. More than three quarters (78%) of SME owners said they’d been worried about cash flow during the pandemic – the most significant concern out of all the respondents.

More than 250,000 companies are at risk of collapse this year, according to a recent quarterly survey by the Federation of Small Businesses, which has called for further help from the government.

Gale always encourages small businesses to have a network of people around them who they work with when times are tough, including their accountant. “Accountants have done an excellent job with furloughing and VAT deferrals and such like. There’s been so much for the practices to do, that we’ve been able to step in and support in areas like cashflow planning, and things like that.”

NEL Fund Managers Limited has also processed applications for the Coronavirus Business Interruption Loan Scheme since it was launched last year, helping small businesses that can’t get all the funding they need from a mainstream bank. “Our investee businesses might have gone to a mainstream bank, who have done their calculations and said, "The max we can give you is £100,000." When they come to us, we've been able to delve under the surface and say, "Actually, we think you're good for another £100,000." 

During the pandemic, NEL has seen particularly high demand for support from businesses connected to food, leisure, hospitality, but in the wider supply chains as well as the frontline. For example, businesses that provide ingredients which are used by restaurants, as well as the restaurants themselves. However, it provides loans to a wide range of organisations across the North East. 

“We're a member of the Responsible Finance network, and all of that network works in approximately the same way. They're heavily relationship-based. So there are people there to listen to what's happened and what somebody's trying to achieve. 

“When we’re working with a small business on an application for support, what we tend to ask for, other than perhaps some prepared financials, is probably things they've already got. Rather than prepare a fancy business plan, we'll say things like, "Can you share with us the marketing material you use with your customers? Can you give us your CV so we can see where your experience comes from?"

“Whereas with mainstream funders use algorithms, which there's nothing wrong with, we find that having somebody to listen, particularly at a time like this when perhaps a business owners position is shifting from week to week, can be invaluable.”

You can get help, support and counselling from CABA (Chartered Accountant Benevolent Association), who are on hand 24/7 to support ICAEW members, ACA students and their close family members in need of mental health and emotional support, either face-to-face or over the phone. Further information can be found at caba.org.uk.

Further resources:

CABA webinar: Looking after your mental wellbeing