A new survey from business insurance firm Simply Business has found that COVID-19 could see two-fifths of UK small- and medium-sized businesses close permanently and could cost the UK SME sector as a whole more than £69 billion.
The survey formed part of Simply Business’ SME Confidence Report and was conducted among 3,700 SMEs. It found that the cost of the ongoing crisis to individual small businesses will be, on average, £11,799. 67 per cent of the businesses polled have been forced to temporarily close due to the COVID-19 lockdown.
Simply Business’ report included the estimate that over 230,000 SMEs have already been forced to permanently stop trading, out of around 5.8 million such businesses throughout the UK. However, the report also stated that “signs of resilience give reason for optimism about the future.”
According to businesses surveyed, 41 per cent of owners fear they are at risk of permanent closure as a result of the pandemic. 14 per cent believe they are likely to close within the next one to three months, 12 per cent believe they are likely to close within three to six months and 11 per cent fear they are likely to close within six months to a year.
Other key concerns highlighted by the survey including losing customers or money, with 49 per cent identifying this as a “top worry”, running out of money (36 per cent), repaying loans from friends, family or private lenders (20 per cent), bankruptcy (12 per cent) and repaying government support (10 per cent). 28 per cent reported earning less money, while 21 per cent said that, despite continuing to operate during the crisis, they have lost work such as contracts and customers.
Regarding how SMEs are funding themselves during the pandemic, 35 per cent of surveyed business owners said they have borrowed from friends or family, 22 per cent have used credit cards and 8 per cent have taken out wider or private bank loans.
56 per cent said they have successfully accessed government support, but 44 per cent said they were either choosing not to access government business aid or were unable to. 17 per cent reported being unable to work and not being eligible for the Self-Employed Income Support Scheme (SEISS) and 9 per cent said they had furloughed their stuff.
However, in signs that a degree of optimism in the sector could be warranted, 75 per cent of those surveyed said they would continue or restart their businesses in the aftermath of the pandemic. 20 per cent said they were optimistic about life after coronavirus, while 10 per cent were confident that they would start a new business.
Commenting on the survey and its findings, Simply Business UK CEO Alan Thomas said: “No business has been able to escape the impact of the pandemic – and that’s no different for small businesses and the self-employed. Yet they are the lifeblood of the economy, and with many of these at risk of permanent closure, so much is at stake for our local communities and wider economy.”
"While it’s an undeniably challenging period for those running a small business, we know entrepreneurs have always shown resilience in abundance. We’re inspired by their optimism and resourcefulness and believe this will only grow as we continue through the phases of lockdown.”
The survey comes as non-essential retailers look to reopen when restrictions are eased from mid-June onwards, although social distancing could impact many as customer numbers are limited. Another key factor will be changes made to the Coronavirus Job Retention scheme, which the Treasury is looking to reform as it currently pays the wages of around 8 million UK workers.
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