SMES using Covid loans to pay bills

HALF of small businesses have used their emergency Covid-19 loans to pay their suppliers, according to data from Barclays.

It also found 35 per cent of small to medium-sized enterprises (SMES) have used some of the money to pay rent on their premises. A third said they had spent part of their loans topping up the wages of furloughed staff.

Barclays, which has put £20.8billion of Government-backed coronavirus loans into the economy, said a number of SMES are looking to the future, with 26 per cent planning to increase their spending on product development. It said 15 per cent plan to increase their investment in automation to boost their productivity.

Hannah Bernard, head of business banking at Barclays, said: “SMES are thinking about how to boost their profits through investment in technology and marketing.” Businesses have been forced to adopt new technological solutions to enable them to remain operational, while workers have had to learn new digital skills.

According to research from Oxford Economics, these changes have increased productivity by allowing people to work flexibly. It believes the gains achieved by SMES and their workers will endure, boosting GDP output by £4.1billion a year.

The research, carried out on behalf of software group Intuit Quickbooks, said London stood to gain the most with a £962million annual boost through the increased use of technology and workers’ upgraded skills. In second is the South-east at £556million, then the North-west with a £415million economic gain.