The impact of coronavirus to SMEs in the UK will exceed £69bn, with two fifths at risk of permanently closing, according to a new report by small business insurer Simply Business.
The SME Confidence Report spoke to 3,700 SMEs across the UK and found that SMEs estimate COVID-19 will cost them £11,779 each on average – including lost work and lost earnings.
With over 5.8 million SMEs in the UK, accounting for over 99% of all businesses, this amounts to a cost of over £69 billion across the UK.
Not only this, but two fifths (41%) of small business owners fear their business is at risk of permanently closing due to the pandemic. Well over a tenth (14%) believe they’re likely to close within 1-3 months, one in 10 (12%) within 3-6 months, and another one in 10 (11%) within 6 months to 1 year.
The study also revealed that 4% of small business owners state they have already permanently ceased trading due to the pandemic – amounting to an estimated 234,400 SME closures across the UK.
Impact to SMEs
While the report shows that all SMEs surveyed have been affected by coronavirus, the impact has been felt in a number of different ways.
Over two thirds (67%) have had to temporarily stop trading. Meanwhile, more than a quarter (28%) are earning less money and one in five (21%) are operating as usual but have lost work (e.g. contracts paused or cancelled, fewer customers).
A further 17% say they’re unable to work and are not eligible for furlough.
Top SME concerns
When it comes to the specific concerns of small business owners, almost half (49%) say they worry about losing customers or jobs due to coronavirus, and a further third (36%) are concerned about running out of money.
One in 10 (12%) worry about going bankrupt, a further tenth (10%) are concerned about being able to pay back government support taken out during coronavirus, and one in five (20%) worry about being able to pay back money borrowed from friends and family or private loans.
The research also showed that SMEs have been receiving financial support from a number of sources. A third (35%) have borrowed from friends or family, over a fifth (22%) have used credit cards, and just under one in 10 (8%) have taken out wider or private bank loans.
In terms of support, three in five (58%) SMEs feel supported by the government – with over half (56%) saying they’ve been able to successfully access government support, and just under half (47%) mentioning that it was easy to find.
Cause for optimism?
SMEs are vital to the UK’s economic prospects, and it is encouraging to see clear signs of stoic resilience within this community.
Over a fifth (22%) report feeling optimistic about life after coronavirus and three quarters (75%) believe they will continue or restart their business after coronavirus.
Furthermore, one in ten (10%) feel confident they’ll start a new business – showing that despite the current pressures and wider economic uncertainty, many small businesses remain hopeful about the future.
Alan Thomas, UK CEO at Simply Business said, “No business has been able to escape the impact of the pandemic – and that’s no different for small businesses and the self-employed. Yet they are the lifeblood of the economy, and with many of these at risk of permanent closure, so much is at stake for our local communities and wider economy.
“While it’s an undeniably challenging period for those running a small business, we know entrepreneurs have always shown resilience in abundance. And it’s hugely encouraging to see that this remains the case – with three quarters planning to continue or restart their business and a further 10% planning to start a new venture in the coming weeks and months. We’re inspired by their optimism and resourcefulness and believe this will only grow as we continue through the phases of lockdown.
“At Simply Business, we insure over 400,000 of these small businesses – from plumbers to accountants to dog walkers. And this means we’ve witnessed first-hand how hard many of them have been hit by coronavirus. We want to support every small business in weathering this storm, knowing that they play such a vital role in our economy.
“Financial support has been vital in keeping small businesses going but with so many new government loans and support schemes available, it can be confusing for owners to locate what they’re eligible for. That’s why we’ve created a free tool to make it easier to access the wide range of financial support – both from the government and beyond. It takes just a few minutes to complete, and then instantly signposts a business owner to the loans, grants or other schemes they could be eligible for, and where to go to access them.”