Around one in three SMEs in the UK are worried that they may never be able to repay the loans they took on during the Covid-19 crisis.
According to figures compiled for EY, more than 80 per cent of SMEs in the UK were detrimentally impacted by the pandemic and many are struggling to recover financially from the damage they sustained in the months after March 2020.
The unprecedented crisis saw millions of companies across the country taking on loans and relying on financial support from the government.
Indeed, EY’s estimates suggest that some 88 per cent of SMEs in the UK took on some form of financial support in response to the Covid situation and 61 per cent say their supply chain was compromised to some extent.
Recovering from the pandemic is now considered a “main challenge” by 51 per cent of the SMEs polled recently and 35 per cent are fearful that they might not be able to repay what money they currently owe their creditors.
A majority (58 per cent) said they saw a decline in revenues and profit margins during the virus crisis, with a very similar proportion experiencing a decline in sales volumes as well.
Close to half of all SMEs across the UK now have plans in place to change their business models and to function more on a digital basis to become more resilient financially and operationally in the future.
For the purposes of the research, SMEs were taken to be businesses with workforces numbering anywhere between 10 and 250 people.
Anita Kimber from EY has said it is “critical” for financial services providers to “do everything they can” to support SMEs as the economy recovers from the devastation of the Covid crisis.
“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,” she said.
“While the worst of the health aspect of the pandemic is hopefully now behind us, economic recovery remains a huge challenge, and is being acutely felt by many small firms that are now concerned with how they will repay their debt.”