Close to one in five small businesses could soon find themselves running out of cash entirely as the coronavirus crisis continues to wreak havoc across the UK economy.
An unprecedented aid package was pledged recently to businesses by the chancellor of the exchequer Rishi Sunak but there are indications that for a lot of small-scale operators that help either will not arrive or will not be enough.
Figures from an accountancy operation called the Corporate Finance Network indicate that around 18 per cent of SMEs either ‘probably’ or ‘definitely’ will not be able to obtain the financial support that’s been promised by government.
Drawing on the experiences of its own members, the accountancy and business advisory network has concluded that very large numbers of small companies will be unable to acquire the cash they need to remain viable while the UK is effectively in lockdown.
The fear is that up to a million businesses will have no choice but to close over the course of April if they aren’t supported by fresh financial backing of some sort.
Concerns have been raised about degrees of accessibility in practice of the loans that banks have been told to provide to businesses on the basis of government guarantees.
Rishi Sunak said recently that “any good business in financial difficulty who needs access to cash to pay their rent, their salaries of their employees, pay suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms”.
The chancellor pledged that the government would guarantee £330 billion worth of loans for businesses while the coronavirus crisis was impacting them.
However, widespread reports are emerging of companies in crisis either not being able to contact their banks to talk about potential loans or being refused them once they’ve been applied for.
The Corporate Finance Network’s research draws on information from 13,000 SMEs, with initial findings seeming to suggest that 18 per cent of companies could collapse within four weeks without help and 31 per cent would be unable to survive if the UK-wide lockdown lasts three months or more.