Weekly SME health tracker reveals a third of business can't access enough cash to last more than two weeks as frustration with rescue package emerges
ACCA UK and the Corporate Finance Network (CFN) are calling on policymakers to analyse current support packages to speed up the process of getting cash to those who need it most as the April payroll payments loom.
ACCA UK and CFN’s weekly tracker of SME health, based on a poll of nearly 9,000 accountants, reveals that a third of businesses will probably not be able to access the cash they need to last more than two weeks of lockdown (33%).
And if the lockdown lasts another four weeks, respondents estimate that 38% of the businesses they advise will definitely not be able to access the additional cash they’ll need to survive, compared with 26% in last week’s tracker.
The latest update about the impact of Covid-19 on SMEs shows more than one in 10 clients have already had to liquidate/dissolve their company, with 92% of private sector members surveyed not having yet made an application to the Coronavirus Business Interruption Loan Scheme (CBILS), although 42% say they may have to apply soon. A further 7% have had an application rejected.
Head of ACCA UK Claire Bennison says: ‘Our members' helpline is being contacted by accountants working with SMEs, striving to secure loans and cash. What they’re experiencing is frustrating for all involved – delays and administrative complexity that undermines the rescue package that’s being offered.
'We totally understand solutions are having to be found at pace, but there’s a rising sense of distress as SMEs face the challenge of working out how they’ll pay their teams over the coming weeks.’
Kirsty McGregor, CFN’s founder, adds: ‘This is now the third week of this tracker, and we’re not seeing any improvement for SMEs filter through the system. The announcements don’t translate into cash for businesses.
'I am also really worried that the HMRC Job Retention grants won’t be received by businesses before their April payrolls are due to be paid.
'Somehow, we need to find the much-needed ability to get cash moving, this week. It’s understandable that banks need to do their due diligence and check their processes and systems, but something immediate needs to happen that solves the limbo many SMEs are finding themselves in.’
ACCA UK and CFN are recommending that real-time analysis needs to be done by fiscal policymakers to analyse the effectiveness of the measures put in place. Stimulus and support measures must be kept open and flexible in order to mitigate the biggest risk faced by economies as the impact of the crises evolves.
A key concern for SMEs and their advisers is that many SMEs are facing April payrolls and many businesses are unsure if they can pay their furloughed staff, even though they’ll then be able to recover this from the government.
McGregor concludes: ‘The banks are still well behind any real movement, perhaps due to the sheer scale of what needs to be done. We understand this is a very fast-moving situation, but what’s needed is short-term finance with cash reimbursement.
'Ultimately, loans are taking too long and while the banking sector gets itself organised, we need immediate cash flowing to SMEs so they can support their employees.’