UK SMEs owed £133bn since lockdown, 50% rejected for loans

UK businesses are returning to work this month with some trepidation, finds fintech business lender MarketFinance. Nine in ten businesses are waiting to be paid an average of £148,917 for work done pre-lockdown, half of those that applied for CBILS loans have been declined and cash flow will be strained as invoices take longer to be settled. It’s little wonder that 85% of business owners have felt a sense of loss of control over the past 3 months.

Finances

With £148,917 still owed to them since March 2020, the vast majority of businesses (81%) are also expecting to wait longer to be paid for the goods they provide and work they do from now on. Half anticipate waiting anywhere between 14-30 days beyond normal terms (45 days). Whilst 15% reported they could be waiting anywhere between 3-6 months longer to be paid for work.

Only 43% of businesses that applied for a CBILS loan were successful in securing it. The typical loan taken by these businesses was £211,667, though they applied for almost double this amount.

Anil Stocker, CEO at MarketFinance, commented: “The reopening of the UK’s high streets marked the first buoyant moment for UK businesses in months but it might well be the calm before the storm.

“Businesses are facing a three-pronged assault on their finances. First up, its alarming that only half of their CBILS loans are being granted, then we learn that they have close to £150k in outstanding payments since the lockdown began and now, it’s likely that they will have to wait twice as long to get paid for new work they do whilst demand and economic activity normalises. This coupled with a very moderate outlook for trading conditions, ‘rent quarter day’ this week and uncertainty about their workforce, no doubt this will put further pressure on businesses.”

Anil Stocker added: “Given the continuing uncertainty around how the country returns to ‘business as usual’, I would urge business owners to look beyond their banks and seek advice as soon as from other lenders, business advisors and mentors. The earlier they do this, the wider the range of potential solutions they’ll have open to them.”

Trading environment

As the lockdown has eased and shoppers return to the high streets, almost half (45%) of businesses are optimistic that there is pent up demand for their products and services which they are eager to serve.

This said, most businesses only expect a conservative 10% increase in sales over the next 3-4 months. While opinion is polarised on prospects; a fifth (19%) anticipate a 25-50% increase in sales whilst one in six (15%) expect a decrease in sales of more than 75%.

Longer term, business owners have revised down their expectations of when they anticipate things to return to normal. In March, the majority (56%) felt business would normalise by September 2020. However, now the majority (57%) feel it could take as long as 1-2 years and are planning for this.

Employment

Most businesses (45%) anticipate only returning up to half of their furloughed staff to work in July and a quarter are likely to be kept on furlough as part of the extended scheme as the economic picture and business climate plays out. The future remains less certain for the remaining quarter of furloughed staff, who could well be made redundant.

Office space

Of those businesses that have a physical location (office, warehouse), over two thirds (68%) are negotiating rent / lease reductions with landlords whilst a third have decided to leave their premises entirely because working from home has proven successful.

Feeling in control

Having faced a number of external shocks as a result of the pandemic, 85% of business owners have felt out of control in their business over the past 3 months. Given the impact of COVID-19, the lockdown, recession fears and a no-deal Brexit 60% of business owners feel exposed to conditions beyond their control.

About the research

Research findings based on a survey of 2,000 UK companies (who employ between 1 and 249 staff with a minimum turnover of £100,000) conducted 17-20 June 2020 by LM Research & Marketing Consultancy (Market Research Society approved partner and ESOMAR corporate member).

Headline figure of £133b is based on 891,000 businesses (= 90% of companies that match survey criteria) declaring monies outstanding since 20th March 2020.

About MarketFinance

MarketFinance is a business finance company with offices in London and Manchester. The online platform enables businesses to access a range of flexible finance solutions — quickly and easily. This smart technology is backed by help from real people so business owners can save time and focus on growing their business.

Since 2011, MarketFinance has advanced over £2.9 billion to companies across a range of sizes and sectors, providing working capital and finance for everything from paying staff and suppliers to launching new products or services and accelerating growth.

For further information visit https://marketfinance.com/