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Pandemic impact may lead to 168,200 SME closures within year

Pandemic impact

While a third of UK SME business owners have taken Covid grants, 25 per cent have received coronavirus loans from the government and a fifth benefitted from furlough payments

Nearly 168,200 small UK businesses are likely to close within the year as three in five feel the negative impact of the pandemic and nearly half believe the government has not done enough to help.

According to new research from cloud accounting provider FreeAgent, less than a third of small- and medium-sized enterprises (SMEs) expect to experience no business growth in the next 12 months, while 9.7 per cent have predicted their business conditions will worsen.

Despite providing state-backed support, many SMEs still do not believe the government did enough to help them through the pandemic.

While a third of UK SME business owners have taken Covid grants, 25 per cent have received coronavirus loans from the government and a fifth benefitted from furlough payments, 47.3 per cent said they do not believe that the government has done enough to help them deal with the impact of the pandemic.

One in five SME owners have consulted an accountant or bookkeeper for help and advice while around four per cent have searched for financial support through bank or private loans.

The Covid-19 pandemic has taken a tremendous toll on small businesses, especially with regard to their mental health and well-being, said Roan Lavery, co-founder and chief executive of FreeAgent.

However, this research puts the seriousness of the economic impact in plain light, and I am saddened to see the extent goes as far as negatively disrupting three in five small businesses, some of whom may not even be operating next year, he said.

The SME sector is one of the most, if not the most, vital pillars of our economy. With SMEs making up around 99 per cent of all businesses it is essential that they have all the support they need to remain economically buoyant, he said. This is more true than ever considering critical support such as furlough will be coming to an end this month.

He said: With this in mind, the period of recovery will be a critical time for the government to step up and ensure as much pressure as possible is alleviated for small businesses, so they make it safely not just through the coming months, but in the years and decades to come.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.