Covid Impact on SME Date
Covid Impact on SME Debt
New research from Sage has revealed the difficult trading conditions ahead for small and medium sized businesses (SMEs). Following the latest (and current) lockdown, the research from Sage has further divided the outlook of SMEs with one-third worse off than November, one-third in a similar position and one-third better off.
Half of SMEs have an average debt burden of £173k per year having taken out some sort of Covid related loan. Only 63% are confident of being able to repay.
Half of previously profitable SMEs before the pandemic are no longer profitable, with redundancies being likely. A fifth of SMEs have made redundancies to date, but a quarter more will be forced to make cuts when the furlough scheme ends.
The majority of SMEs support a cut to VAT to stimulate demand.
There is some encouraging news with over half of SMEs that were surveyed said that if “business as usual” resumed tomorrow, then productivity would have improved compared to a year ago, with a third saying digital tools will help boost efficiencies. SMEs are hoping for financial incentives in order to invest in technology.
With the Covid loan repayment period looming, polling has revealed that just under half have taken out loans because of the pandemic. The most popular form of borrowing is Government-back loans (12%), borrowing from friends and family (8%) and private business loans from commercial lenders (8%).
