Small businesses facing huge uncertainty over future finances as second lockdowns start in UK

Call for new bounce back loans scheme for SMEs as economic crisis persists

Eight out of ten accountants say that the SMEs they represent are not fully aware of their funding requirements and financial risk over the next six months, according to the latest ACCA UK and The Corporate Finance Network (The CFN) SME Recovery Tracker.

The results, from a survey of accountants representing 2,840 businesses across the UK, also found that 64.2% of small business owners were feeling more stressed and anxious since the announcements of further lockdowns across England, Scotland and Wales.

Worryingly, although more than 86% had used furlough to retain all their employees until now, more than 9% of businesses were now considering cutting jobs, despite furlough being temporarily extended into December.

ACCA (The Association of Chartered Certified Accountants) and The CFN are calling for the Government to launch a second increased, independent and inclusive round of the bounce back loans scheme, as many businesses may require a secondary loan to see out the health crisis. Previously, results from the SME Recovery Tracker research showed that 65% of clients seeking Bounce Back Loans had been successful, compared to 18.9% of clients applying for Coronavirus Business Interruption Loans.

Kirsty McGregor, founder of The Corporate Finance Network, comments: ’We are calling for the government to bring back bounce back loans for SMEs who are now facing a prolonged economic crisis. We believe a second scheme must match the original and offer a second loan of up to £50,000.

‘Many microbusinesses relied on this scheme when they weren’t considered viable for the Coronavirus Business Interruption Loan Scheme (CBILS). The scheme was introduced to support them through a few months, but as this uncertainty has now continued into many more months, those initial loans have been spent. If they could apply for a further loan, this may support those smaller businesses who still wish to be able to trade out of this crisis but may not have been able to access any other grants or furlough.’

Claire Bennison, head of ACCA UK, adds: ‘Our SME owners need support that is clear, inclusive and supports them through to recovery. It is concerning that accountants believe the majority of smaller businesses do not have a very clear view of their finances over the next six months and are being drawn into focusing solely on the day to day challenges. Our call for a second fully inclusive bounce back loan will help them to move forward and plan for recovery.

‘While it’s understandable that owners may feel there’s no point in looking too far ahead in this constantly changing situation, we would encourage them to speak to their accountant to help them to plan for reasonable scenarios and access as much business support in the form of funding or advice that might be available to them.’

Graeme Tennick FCCA, UK Digital Accountant of the Year, explains his approach to advising business owners: ‘I have advised clients to plan ahead and take the government-backed loans, even where they could plan to scale back so they could manage without them, as once they factor in a few different variables and scenarios the outlook can be very different.  

‘I’ve explained they can leave the funds in the bank if they don’t need to use them, but it provides them with peace of mind and freedom to make decisions which may otherwise cause them additional worry and stress.’

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Notes to Editors

About the ACCA UK and The CFN SME Recovery Tracker

This edition has sought views from accountants working in practices advising some 2,840 SME clients. The poll closed on the afternoon of 4 November, 2020.

About SMEs

SMEs, (typically less than 250 employees), account for 99.9% of the private sector employment in the UK and there are 22 million employees working for these private sector businesses.

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. 

ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development. 

Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally. 

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. 

About The Corporate Finance Network 

The Corporate Finance Network – www.thecfn.org.uk - The Corporate Finance Network consists of some of the most proactive and commercially astute regional, independent accountancy firms in the UK. They specialise in providing corporate finance advice for smaller transactions.  Kirsty McGregor can be contacted at info@TheCFN.org.uk

"Our SME owners need support that is clear, inclusive and supports them through to recovery"

Claire Bennison - Head of ACCA UK