By Anna Jordan on Small Business - Advice and Ideas for UK Small Businesses and SMEs
A third of small businesses are worried that they won’t be able to repay their Covid loans.
As government support winds up, with furlough ending last week, research shows that firms are still struggling. A survey of 712 business carried out by EY earlier this year reveals that more than half of businesses (51 per cent) who responded said that recovering from the pandemic was their main challenge, indicating that they may need continued support.
Anita Kimber, a UK financial services partner at EY, said: “Businesses of all sizes have been impacted by the pandemic, but SMEs have disproportionately suffered, with large numbers relying on financial support just to survive.”
“At this important juncture, it’s critical that all financial services providers continue to do everything they can to support SMEs through the recovery effort and beyond, offering personalised recovery planning and seizing the opportunity to get a deeper understanding of these businesses.”
Almost one in nine businesses received financial support – from financial institutions and the government – during the pandemic. After three lockdowns and a lot of uncertainty, 81 per cent of UK SMEs say they were detrimentally impacted by the COVID-19 pandemic:
- 61 per cent state their supply chain was compromised
- 58 per cent reported a decline in revenue and profit margin
- 57 per cent saw a drop in sales volumes
Banks have lent out almost £80bn in loans guaranteed by the government to 1.56m firms, as well as providing extensions to working capital, overdrafts and capital repayment holidays.
Now that the emergency support has gone, MPs are addressing struggles for businesses to get loans historically. MPs in the all-parliamentary group on fair business banking (APPG) highlighted a £22m funding gap for smaller businesses last month, partly because lending had dried up after the financial crisis. The group is calling on the government to develop regional leaders, or community-developed finance institutions, getting loans around the country more effectively.
Problems have also arisen around repayment and fraud from pandemic schemes. Lloyds has sent letters to some Bounce Back Loan recipients demanding full repayment with interest within 14 days where it suspects there was information that was “incorrect, inaccurate or misleading”. The bank threatened to close accounts and stop banking services if it didn’t receive the money within this two-week period, according to The Times.
Read more
What happens if I can’t repay my Bounce Back Loan?
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via https://www.aiupnow.com
Anna Jordan, Khareem Sudlow
