Over 350,000 businesses cannot afford to repay covid loans

A survey of small businesses has found that 59% used government loans or furlough schemes during the pandemic, around 3.5 million businesses.

The YouGov poll commissioned by Lawbite also revealed that at least 10%, which could represent as much as 354,000 SMEs, could not now afford to repay the loan due to the impact of cash flow and supply chains.

Almost a quarter of affected SMEs reported their supply chains have been disrupted due to late payments caused by loan repayments.

Close to 40% of affected small firms said they can’t invest in new technology or products amid cash flow concerns.

About 18% of participants, amounting to 63,720 SMEs, intend to make redundancies, and 16% (56,640 businesses) cannot afford to pay existing staff due to the impact of loan repayments.

Founder of LawBite Clive Rich said “The end of furlough and repayment of Covid loans is placing a significant strain on the cash flow of thousands of our SMEs. This is without even considering other challenges like Brexit, which also harms supply chains, cash flow and employment.”

Rich also said that the government should introduce new measures, such as improving access to finance for SMEs and incentives to integrate new technology, to boost productivity and growth,