0800 644 6080
Call FREE from Landline and Mobile
Est. 1989

“Sizable Number” of SMEs Expected to Struggle with Debts in 2021

Written by: Keith Tully

Businessman struggling with debtsThere are likely to be a sizable number of small to medium-sized enterprises across the UK struggling to pay off debts they’ve taken on in recent months.

That’s the view of experts at the British Business Bank (BBB), which has released data showing that SMEs applied for loans at an unprecedented rate last year as the Covid-19 crisis caused havoc across the economy.

Close to half (45 per cent) of all UK-based SMEs, meaning businesses with 250 or fewer employees, applied for external financial support in 2020, which in 89 per cent of cases was in response to the pandemic.

The BBB has said that it expects demand for loans to remain strong among SMEs this year, while also warning that many will find it tough to pay back money they now owe in relation to debts they took on last year.

“There are both a sizeable number of smaller businesses in a position to borrow further in 2021 and a sizeable number likely to struggle with debt repayments,” the BBB has said.

“High levels of debt, and in particular the number of businesses with higher debt to turnover ratios, suggests a potential drag on viable applications for finance in 2021.”

According to the BBB, when asked in Q4 2020, only one in five (21 per cent) of smaller firms in the UK said they expected to grow over the course of 2021, with 4 per cent indicating they expect to have closed or sold their businesses before the beginning of 2022.

Around a third of the companies polled said they expect to see their operations shrink to some extent during 2021.

Hospitality operators are among those to express the greatest pessimism about their future financial prospects towards the end of 2020, with some 37 per cent suggesting they may well not be able to repay the amounts they’ve borrowed to survive the impact of the coronavirus pandemic.

However, Catherine Lewis La Torre, chief executive of the BBB, has said she hopes that a stronger-than-expected economic recovery might yet put SMEs and other businesses into a better position financially than they’d been anticipating as 2021 unfolds and the UK comes out of lockdown.

Keith Tully

Author
Keith Tully
Partner

Join Keith Tully on Linked In Follow Keith Tully on Twitter

Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

Meet our Team of Experts
Director Support - Business suffering from Cash-Flow Problems?
If your company is financially distressed, we also offer the below services:
Business debt recovery

  • Recover Unpaid Invoices of £5k+
  • Expert Credit Control Services
  • Stop Late Payers & Bad Debts
Visit Site
Time to pay experts

  • Get Breathing Space with HMRC
  • Support with Business Tax Arrears
  • 35 Years HMRC Negotiation
Visit Site
UK Business Finance

  • Rejected for a CBILS Loan?
  • Get Emergency Business Funding
  • Supporting 1000+ UK Companies
Visit Site
Who we help
  • Company Directors
  • Finance Directors
  • Sole Traders
  • Accountants
  • Small Businesses
  • Large Businesses
  • Partnerships
Contact our team
Jonathan Munnery
Gillian Sayburn
Julie Palmer
Processing...
Loader
or Find your Nearest Office

Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY

Business Rescue Advice for Directors
Free Guide for Limited Company Directors
Business Rescue Advice for Directors
  • How to manage company cash flow problems
  • Advice on dealing with HMRC
  • Understanding rescue and closure options
  • And much more...
Free Guide Download
Dealing with your Insolvent Clients
Business Rescue Guide for Accountants
Dealing with your Insolvent Clients
  • Helping you advise insolvent clients
  • Spotting signs of client distress
  • Exploring business rescue options
  • And much more...
Free Guide Download
Our numbers speak for themselves
100
Number of UK Offices
30000
Directors Helped
70+
Licensed Insolvency Practitioners