Credit, Collections & Insolvency News
Small and medium-sized (SMEs) businesses are concerned about the longer-term impact of the coronavirus storm, though many have benefited from the government support measures over the past month according to a new survey by chartered accountancy body ICAEW has found.
The ICAEW asked its members both working in SMEs and servicing SME clients across the UK how the businesses they advised had responded to the economic disruption of the past six weeks – and what they would need to survive until the lockdown is lifted.
Two-thirds of SMEs have applied for cash from one of the government’s schemes, with most respondents reporting that funds had already reached them. The results clearly showed the success of some key measures, including the furlough scheme, grants from local authorities and the business rates holiday, ICAEW said.
Nevertheless, most small businesses are depending on their own reserves of cash to get them through the crisis. Companies had also cut discretionary spending, reduced salaries and bonuses and put staff on paid leave. The majority said they had enough cash to operate for at least three months, but a quarter said they would run out of money by July.
However, the survey found that the Coronavirus Business Interruption Loan Scheme (CBILS) had been slow to provide cash to small businesses. Although two-thirds of SMEs had applied under the scheme, only one-fifth of these had actually secured loans. The government has this week launched the Bounce Back Loans scheme, following the well-publicised limitations of CBILS.
SMEs are also worried about how the lockdown would unwind, and ICAEW said the findings suggest a ‘cliff edge’ or sudden cessation of government support would likely jeopardise a very large number of businesses. Respondents called for government to show flexibility and a continued commitment to provide as much support as necessary as restrictions eased and the recovery started.
Companies understood that the resumption of anything like normal business would require them to practice appropriate social distancing in the workplace, the results also suggest. Businesses will also need increased demand for their products and services, flexibility to retain staff, and ongoing government support to recover, respondents said.
Michael Izza, ICAEW Chief Executive, said “Chartered accountants are reporting a solid start for the government strategy to protect businesses and jobs in this crisis. But many SMEs are running down their reserves, with a quarter of SMEs telling us they could be out of cash by July, and they need to be confident that government will continue to do whatever it takes in the longer term.”
“Even as the lockdown is eased, businesses will need to see flexibility and imagination from government, to avoid the kind of cliff-edge which would be lethal for many SMEs.”