‘We cannot reopen under the distancing measures’

SMALL to medium sized businesses say they will struggle to trade under current social distancing measures.

The latest results from the ACCA UK and The Corporate Finance Network (The CFN) SME Health Tracker found that on average 16% of SMEs said they think social distancing will make it impossible or unviable to reopen their business

This equalled around 1,500 of the SMEs surveyed of the 9,000 businesses across the UK.

Of concern for the ACCA (Association of Chartered Certified Accountants) 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 revealed 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.

Lloyd Powell, head of ACCA Cymru Wales said: “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.”