A survey launched by CapitalBox, one of Europe’s largest online-only lending platform, unveils the devastating effects of the pandemic on small and medium businesses in the UK. In particular, the consequences of multiple lockdowns, the increase in household savings and shift in consumer needs, that has caused SMEs.
The survey found that overall, 68% of small and medium businesses in the UK have had their cash flow negatively impacted by the pandemic. 23% of those that responded said they have bit hit ‘very negatively’, whilst the other 43% ‘slightly’.
Those that have had their cash flow impacted said that they were unable to reinvest in the business to help survive the recession (34%), unable to pay employees (25%), have had to turn down work and client jobs (25%), and haven’t been able to cover debt or loan repayments (15%).
In response, SMEs in the UK have had to take measures in order to cut costs and help them in times of crisis. These cuts have included pausing or stopping future projects (36%), reducing staff hours (26%), reducing staff pay (25%), cutting office perks (25%), and reducing office space overheads (20%).
To survive, 56% of small and medium businesses in the UK have had to take out a loan during the last year – mainly to pay for overheads (39%) and to pay wages (20%).
Over the last year, government support has been critical. With 55% of SMEs applying for and receiving help from the furlough scheme, 36% received tax relief and 43% leant on government loans.
It comes as no surprise that the industry that has suffered the most across Europe is the hospitality and leisure sector – with 34% of SMEs in this space ‘very negatively’ impacted since the start of COVID-19. This is followed by those in utilities (32%), agriculture (22%), marketing and professional services (21%), construction (20%).
Since the survey, the British Government has implemented new loan options to revamp the existing Coronavirus Business Interruption Loan Scheme and extended furlough, to ensure businesses are supported until we are out of the pandemic.
Scott Donnelly, CEO of CapitalBox said, “I am pleased to see that the majority of small and medium businesses across Europe feel that they have been sufficiently supported by their governments during one of the hardest times we have had to face. We have seen an exponential rise in household saving during the pandemic due to closures of pubs, restaurants and shops which has in turn had a huge impact on small businesses that need our help to survive. They need the consistency of income and footfall.
“However, what I love about small businesses is that they truly thrive in times of disruption and crisis. They have the ability to be flexible, the power to adjust their way of working to meet the needs of consumers. Governments must make sure though that they have access to immediate cash to avoid a gap that could damage their business – whether that is through loan schemes or working with alternative lenders outside of the retail space, is essential. SMEs are confident in the year to come, and so am I.”