Purpose – In exploring how small and medium-sized enterprises (SMEs) overcame COVID-19 restrictions by deploying their specific dynamic capabilities to pivot their business models, this article explains the novel approaches that SMEs take and how they have responded to the financial challenges that arose from the
pandemic.

Design/methodology/approach – The article adopts a dynamic capabilities lens to explain: (1) the specific financial effects of the relatively “short” (seven week) COVID-19 lockdown during March and April 2020 on SMEs; (2) the barriers they faced; and (3) how they overcame these barriers. The data were collected via
semi-structured interviews with the owner-manager or a senior manager in each surveyed SME. The interview data were analysed using NVivo.

Findings – Analysis of the findings revealed five key factors: (1) the capability of SMEs to access external resources, especially entrepreneurial finance; (2) their ability to reconfigure resources and plan for the longer term, yet retain flexibility; (3) how entrepreneurial learning provided the capability to deal with the
“unplanned” events/uncertainty; (4) the importance of networking and sources of information; and (5) the remarkable optimism for a future recovery, despite the difficulties of the trading period.

Originality/value – This research fills a unique niche, as no previous studies have examined the resilience and dynamic capabilities of SMEs during a complete lockdown and business shutdown of this magnitude. This context, unprecedented in the history of modern economies, offers a new lens through which to understand the mechanisms of business survival and adaptation in times of severe disruptions. No previous studies have been
conducted in unique circumstances during a time when SMEs were faced with such a strict lockdown with travel and business completely shut down.