Thousands of UK small businesses ‘can’t repay Covid loans’
Thousands of SMEs that received government Covid loans and the furlough scheme can now not make repayments amid limited cash flow, a survey of small businesses out today shows.
The survey projected 59 per cent of SMEs in the UK, amounting to around 3.5m businesses, used government loans or furlough schemes during the pandemic.
The YouGov poll commissioned by Lawbite, 511 SME decision-makers were surveyed online.
At least one-tenth, which could represent as much as 354,000 SMEs, could not now repay the load due to the impact of cash flow and supply chains.
Almost a quarter of affected SMEs reported their supply chains have been disrupted due to late payments caused by loan repayments.
Close to 40 per cent of affected small firms said they can’t invest in new technology or products amid cash flow concerns.
About 18 per cent of participants, amounting to 63,720 SMEs, intend to make redundancies, and 16 per cent (56,640 businesses) cannot afford to pay existing staff due to the impact of loan repayments.
Founder of LawBite Clive Rich said: “The end of furlough and repayment of Covid loans is placing a significant strain on the cash flow of thousands of our SMEs. This is without even considering other challenges like Brexit, which also harms supply chains, cash flow and employment.”
The government should introduce new measures, such as improving access to finance for SMEs and incentives to integrate new technology, to boost productivity and growth, Rich suggested.