Nearly 20% of owners admit their business can not survive longer than a month without a boost to their cash flow.
Research conducted by Buckworths, the UK’s only law firm working exclusively with start-ups surveyed over 500 British SMEs to understand the impact COVID-19 is having on their business.
Since March 23rd the UK has been living under strict social distancing laws to help stop the spread of Coronavirus. As a result, all non-essential businesses have been forced to shut, leaving many SMEs without a consistent form of income for over a month.
Since the self-isolation regime has been implemented Chancellor Rishi Sunak announced two government-funded loan schemes targeted specifically to aid the self-employed. The first being the Coronavirus Business Interruption Loan Scheme (CBILS).
UK Finance reported yesterday that lenders have approved 25,262 out of 52,807 completed CBILS applications. A significant jump 8,638 approvals as lenders faced criticism over the past weeks for its slow pace in approving loans.
More recently this week the chancellor announced the “Coronavirus Bounce Back Loan” which will allow small businesses to borrow between £2,000 and £50,000 and access the cash within days.
Despite these efforts, 27% of SMEs don’t think the Government’s support scheme is enough to help them survive the impact of COVID-19. With strict lockdown measures expected to last for at least another week, SME owners are starting to lose optimism in regard to how long it will take them to fully recover from the ongoing economic disruption.
Over 35% of SMEs in the financial sector believe it will take up to 2 years for them to recoup the financial losses caused by COVID-19. With 22% of retailers and 33% of those working in transport expecting similar recovery time.
“The UK government has largely been on the front foot during the coronavirus crisis, announcing measures, such as the job retention scheme, almost before businesses had formulated their proposal comments Michael Buckworth, Managing Director at Buckworths.
“However, the government now seems to be on the back foot, reacting to pressure from business and the media to end the lockdown, and repeatedly failing to outline a viable exit strategy.
Our research clearly shows that Britain’s smaller businesses don’t have the resources to survive and re-open if lockdown continues for much longer. With so many SMEs, particularly those in the retail and hospitality sectors, already saying that they are on life support, an extension would be the equivalent of pulling the plug.
Not only would it devastate the UK economy and create a record spike in unemployment, but it would also lead to so many business closures that a return to normal pre-COVID-19 society would no longer be a feasible option.”
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