SMEs bootstrapped by social distancing requirements

Small to medium sized businesses (SMEs) will struggle to trade if social distancing measures continue, finds the latest results from the ACCA UK and The Corporate Finance Network (The CFN) SME Health Tracker.

Accessing a survey pool of accountants representing nearly 9,000 SMEs across the UK, the findings show that on average 16% of SMEs said they think social distancing will make it impossible or unviable to reopen their business – equaling around 1,500 SMEs represented across this research pool.

Alarmingly, only 27% of SMEs have written financial forecasts or business plans that have been reviewed as a result of the Covid-19 outbreak.

Compounding cashflow concerns, feedback also reveals ongoing worries about accessing finance some 13 weeks into lockdown. For accountants who have made enquiries for the Coronavirus Business Interruption Loan Scheme (CBILS) on behalf of their clients, 37% have been approved, and 21% declined. A third of accountancy respondents said their experience of applying for CBILS has affected their clients’ appetite for further applications, putting them off from doing so.

As small businesses also look to funding through the alternative Bounce Back Loan Scheme, 40% of SMEs report that their Bounce Back Loan amount will not be enough to meet their liabilities over the next 12 months.

Tax deferments are still being used as a stop gap, with 68% of SMEs deferring. Of those, 67% say it’s likely they can meet their tax liabilities in six months.

The Tracker’s ongoing questions about wellbeing reveal continued stress for SMEs. Practitioners report 70% of their clients are feeling more stressed and anxious than usual, with 14% feeling unable to cope.

Kirsty McGregor, founder of The CFN says: ‘What’s filtering through in this week’s results is a sense that the Bounce Back Loans have worked compared to CBILs. Most of the Bounce Back Loans have been accepted and turned around quickly, which is great news. But the 40% who don’t think this will stretch to meet their needs is concerning. Debt is a massive issue for the future, something which needs careful handling.’

Claire Bennison, head of ACCA UK says: ‘Tax deferrals, cashflow, late payments and incoming future liabilities are all part of a growing uncertain picture for SMEs. A key issue for policy makers will be about the provisions that could be offered to prevent a bottleneck of financial liabilities among small businesses that may be struggling to resume operations. SMEs need ongoing backing to handle what is essentially a credit crunch storm coming – they need clarity and support for the future.’

- Ends -

Notes to Editors

For media enquiries, contact:

Maurice Richmond
E: maurice.richmond@accaglobal.com
M: +44 (0)7802 951 809

Nadia Manuelli
E: nadia.manuelli@accaglobal.com
M: +44 (0)7808 940139

Monique McKenzie
E: monique.mckenzie@accaglobal.com
M: +44 (0)7725 613 447
Twitter: @ACCANews

www.accaglobal.com

About the ACCA UK and The CFN SME Health Tracker
The expert panel of accountants polled represent 16,000 clients across the UK and the poll closed on the afternoon of 9 June 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 UK has 167,000 members and future members. Globally, 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. More information is here: www.accaglobal.com

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

 

"Tax deferrals, cashflow, late payments and incoming future liabilities are all part of a growing uncertain picture for SMEs. A key issue for policy makers will be about the provisions that could be offered to prevent a bottleneck of financial liabilities among small businesses that may be struggling to resume operations. SMEs need ongoing backing to handle what is essentially a credit crunch storm coming – they need clarity and support for the future."

Claire Bennison - Head of ACCA UK

"What’s filtering through in this week’s results is a sense that the Bounce Back Loans have worked compared to CBILs. Most of the Bounce Back Loans have been accepted and turned around quickly, which is great news. But the 40% who don’t think this will stretch to meet their needs is concerning. Debt is a massive issue for the future, something which needs careful handling."

Kirsty McGregor, Founder - The Corporate Finance Network (the CFN)