A survey of small businesses by Mazuma Accountants has found that 39% believed they would struggle to meet repayments of the Government’s Bounce Back Loan Scheme when they start this month.

With repayments of the Government’s Bounce Back Loan Scheme (BBLS) scheduled to start this month, the poll found that almost 40 per cent of small business owners say this will add further strain to their already stretched resources.

The research, conducted between 25th May and 2nd June 2021, showed that while around half (51 per cent) of small business owners say that the repayments will be ‘manageable’ or ‘more than manageable’, 39 per cent (4 in 10) admitted they will ‘struggle’ to find the funds needed each month to honour the payments.

Lucy Cohen, Co-founder of Mazuma, an online accountancy platform for small and microbusinesses, said: “June marks the first month for repayments to be made, but as our research shows there remain a significant number of businesses for whom the recovery has yet to kick into gear.”

“The ‘Pay As You Grow’ option may seem appealing to many business owners facing the prospects of having to find an additional £700 each month for the next six years, but caution needs to prevail.”

“While the concept is sound, the implications for businesses who opt to either delay the start of their repayments by six months or extend the term of the loan from six to 10 years, or both, could do more harm than good. This is because interest will be added, and it could affect the business’s credit rating too.”

When asked the reasons for taking the Bounce Back Loan in the first place, 36 per cent said they used it to maintain a positive cash flow. 30 per cent redistributed their loan to pay bills or suppliers, 15 per cent invested the loan into staff retention, while a further 15 per cent used the money to invest in the business itself through marketing and other growth tactics.

Over the last 12 months, 1 in 3 (34 per cent) small and microbusiness owners say they have experienced either ‘significant’ (11 per cent) or ‘relative’ (23 per cent) decline in revenues. By contrast, 21 per cent saw no change in income levels and a further 37 per cent saw either an ‘increase’ (28 per cent) or ‘significant increase’ (9 per cent) rise in revenues.

Respondents were also canvassed on how they see the economy performing over the next six to 12 months. 26 per cent admitted to being concerned over what lies ahead given their current situation, but 64 per cent stated feeling either ‘confident’ (39 per cent) or ‘extremely confident’ as to their prospects in the year ahead.

Cohen added “With speculation mounting as to the possibility of the planned easing of restrictions being extended beyond 21st June, these findings serve as a stark reminder that while there is growing confidence in the economy overall the reality of the here and now is that a significant number of businesses in the UK are still struggling financially.”

“The fear is that the longer the current restrictions remain in place, the more difficult it will be for many already-stretched small businesses to generate the additional income that is needed to repay their bounce back loan.”

“This could see some business owners forced into making some tough decisions over the coming weeks – if the amount of cash in the till isn’t enough to cover what needs to be paid out, further cuts on top of those already made will need to be considered.”