Small firms stare into the abyss as money runs out - Greg Wright

Amid all the uncertainty surrounding the pandemic, one fact remains clear. The Government must honour its pledge to provide swifter access to emergency loans or we face a landslide of business failures.

Data compiled by industry groups paints a chilling picture. Only a small fraction of British businesses have been able to get hold of emergency loans, despite promises that money would start flowing quickly.

Just 1 per cent of firms have successfully accessed the Government’s Coronavirus Business Interruption Loan Scheme (CIBLS), which was announced by the Chancellor last month, according to new data.

The results, from a British Chamber of Commerce survey, found that 8 per cent of the companies that responded had been unsuccessful in their applications.

Firms said that a complex application process and slow replies had held them back.

A total of 37 per cent of respondents said they plan to furlough between 75 per cent and 100 per cent of their workforce in the coming week.

“Our latest data shows that many businesses face a cliff-edge scenario, either at the end of this month or over the course of the next quarter,” said BCC director general Dr Adam Marshall.

Businesses have been given access to the government-backed loans to help them through the coronavirus outbreak.

Certain smaller companies can also apply for grants of up to £25,000, depending on their size and sector.

But - so far - the support does not appear to be reaching many firms on the front line.

The Corporate Finance Network, which represents regional accountancy firms, has carried out research into how 10,000 of their SME (small and medium-sized enterprise) clients are coping with the restrictions imposed by the Government in response to the pandemic.

The study predicts that in the next two weeks, as a result of the COVID-19 lockdown, 20 per cent of these businesses will “probably” or “definitely” run out of cash.

The research also predicts that 26 per cent of all SMEs will not be able to survive a further lockdown of four weeks.

Kirsty McGregor, founder of The Corporate Finance Network, said: “We urge the Treasury to make some swift decisions because these business owners do not have the luxury of being able to be patient.”

Almost 70 per cent of the UK’s smallest businesses expect to lose more than half of their annual turnover due to the coronavirus crisis, according to research by the University of Sheffield conducted in association with Small Business Britain.

The survey focuses on micro businesses – defined as companies with up to nine employees – which account for 96 per cent of the UK’s total business population, and collectively employ more than nine million people.

Academics from the University of Sheffield’s Management School have surveyed more than 1,500 micro business owners to assess the resilience of the UK’s most vulnerable firms.

They found 67 per cent are now “very” or “somewhat” lacking in confidence, with just two per cent very confident about their prospects, which is believed to be some of the worst figures on record.

The overwhelming majority (93 per cent) do not have any insurance to mitigate losses caused by the pandemic.

Dr Cristian Gherhes, a Research Associate at the University of Sheffield, said: “Our research is revealing that confidence among the UK’s smallest businesses is at rock-bottom, with most expecting to see more than half of their gross income wiped out by the coronavirus crisis.

“Most of these businesses don’t want to give in to the pressure of the pandemic. But they urgently need further support and clarity over when funds are going to be made available if they are to survive the crisis.”

The Chancellor has promised to listen and plans to strengthen support for businesses. Without decisive action, many firms will not survive to see the post-pandemic world.

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