Businesses need to diversify into new areas to survive the Covid-19 pandemic, Folk2Folk has warned.
The rural business peer-to-peer lending platform said that companies have been affected by having to close for the lockdown and once they reopened, by being forced to adhere to social distancing rules.
Folk2Folk said businesses across all sectors are considering how to pivot, for instance, by looking at new products or different services they can provide in order to remain sustainable. But traditional finance sources are losing their appetite for funding this type of diversification, the lender added.
Read more: Folk2Folk calls for CBILS extension
“Many business owners face tough decisions and so the scale of business change may range from mild to dramatic,” the platform said in a blog on its website.
“We believe diversification is something to be celebrated and supported. Diversification can work as a growth or survival strategy for businesses and it may well be the secret to our country’s post-pandemic recovery and post-Brexit success.
“But then here’s the rub; obtaining the finance to fund new directions or new ventures is for many a point of real stress – especially when a degree of certainty and speed is required as is often the case in ‘make or break’ scenarios.
“Sadly, as business appetite for diversification has grown, traditional finance provider appetite to support it has diminished – especially now.”
Folk2Folk said institutions are becoming less attracted to smaller, rural, local and entrepreneurial firms. The platform specialises in this area and funds their diversification.
The lender said over the past 10 years rural and farming businesses have sought to create new and alternative revenue streams by expanding and diversifying into new industries, to compensate losses.
“This entrepreneurial spirit shown by British farmers and landowners has proven that new opportunities and ideas can be turned into profitable and sustainable businesses,” Folk2Folk said in the blog.
“And now we’re seeing an increase of this trend across other sectors, as businesses innovate and get creative about sustaining their future in the wake of the Covid-10 pandemic.”