One if four SMEs say they are unlikely to be in business at the end of the year as a result of the Covid pandemic, according to the latest research from WorkLife by OpenMoney.
It’s Small Business Monitor shows the effect Covid-19 is having on many of these businesses, with three fifths (61 per cent) saying they won’t be able to stay afloat without additional funds.
Meanwhile just over three-quarters (77 per cent) of firms are still dependent on government financial support schemes, with business rates relief (27 per cent) and the job retention – or furlough – scheme (27 per cent) proving most popular.
At the time of the survey, 23 per cent of respondents had taken out bounce back loans and 21 per cent were using the business interruption loan scheme.
Almost half (45 per cent) of businesses surveyed expect income to remain subdued over the next 12 months, with a fifth (20 per cent) of respondents stated that they were worried about falling sales.
Keeping up with bills troubled 17 per cent of SMEs, which may indicate why so many have such a grave short-term outlook.
But it’s not all doom and gloom. Looking ahead, many firms are feeling much more positive about the coming 12 months when compared with this time last year. While 45 per cent of firms expect income to remain subdued, nearly a third (31 per cent) expect this to increase.
Those in the retail, arts and hospitality sectors were most hopeful of an uplift, indicating that even businesses in the hardest hit sectors are now more optimistic. On average, 72 per cent SMEs expect income to return to pre-pandemic levels within the year. 22 per cent of those surveyed think it will take longer.
Steve Bee, director of WorkLife by OpenMoney, commented: “Many once thriving small businesses now face an extremely uncertain future. Despite the immense challenges however, UK SMEs have continued to adapt and embody the entrepreneurial spirit our country is famous for.
“Regardless of a firm’s specific situation, most important now is taking steps to strengthen its long-term health. Given how vital workers will be to recovery, key to this will be ensuring they are equipped to manage the long-term effects of the pandemic, including addressing issues linked to personal finances or mental health.
“Looking ahead, workers are going to remember how their employer supported them in adjusting to the new normal. How businesses respond now will have a significant impact on employee wellbeing, productivity and loyalty at a crucial time.”