Home Business News At least 3 in 10 SMEs will be forced to close if lockdown is extended

At least 3 in 10 SMEs will be forced to close if lockdown is extended

by LLB Finance Reporter
8th Feb 21 8:39 am

With the third national lockdown already involving an extension until March 8, new research from Nucleus Commercial Finance, reveals that at least three in 10 (30%) SMEs will be forced to close for good by the end of the year if it is extended until the end of March. This equates to just under 1.8 million businesses. A further 25% will continue to operate but make no profit.

The longer lockdown lasts, the more businesses will have to shut. If lockdown continues until the end of April, 33% of businesses will be forced to shut, this increases to 37% if lockdown continues until the end of May, and 42% if it goes on until the end of the summer. A possible extension is thought to put the most pressure on larger businesses (those with 50-249 employees), with 51% saying they will have to shut for good if lockdown is extended until the end of May.

Nearly a third (31%) of UK SME owners believe this lockdown will last until at least the end of March. An additional one in five (22%) expect it to continue until the end of April, and a further 14% until the end of May.

The research also reveals the impact a lockdown extension will have on small and medium sized businesses across the country, the wider reaching impacts include:

  1. Making a loss for the year – 22%
  2. Reducing their offering – 11%
  3. Making redundancies – 8%
  4. Closing some of their sites – 7%
  5. Closing the business – 6%

By contrast, however, some SME owners think a lockdown extension will benefit their business. One in five (20%) expect to continue to operate and deliver profit, and a further 6% believe an extension to lockdown will have a positive impact on their business.

Nucleus Commercial Finance CEO, Chirag Shah, said: “With a third national lockdown underway, many SMEs have limited time they can survive without delivering more income. Despite the government support measures in place, businesses can’t continue operating under such uncertainty and with limited notice about changes to restrictions. Businesses need a clear road map out of the pandemic, so owners can plan and have clear visibility of the support available to them.

“With the government support schemes coming to an end next month, we are seeing businesses stockpile CBILS loans ahead of the deadline in order to provide them with financial flexibility and security for the weeks and months ahead. During these challenging times, financial planning will be crucial, helping SMEs to future-proof their business in the current environment and beyond. Together, we can help build a brighter future for SMEs, ensuring they are well placed to tackle further challenges thrown their way and ultimately provide a boost to our economy.”

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