A survey found that thousands of small businesses that have taken out government-supported coronavirus loans are unable to make repayments due to limited cash flow.
A YouGov poll commissioned by Lawbite and first reported on CityAM, showed that 59 percent of UK small and medium-sized enterprises (SMEs), equivalent to around 3.5 million businesses, used government funding or vacation loans during the pandemic.
At least one in ten SMBs are now unable to repay due to the impact of cash flow and supply chains, and nearly a quarter of affected SMBs said payment delays have affected their supply chains.
Continue reading: The head of Innovate Finance praises the strength of the P2P lending sector during Covid
Around 18 percent of SMEs are planning layoffs, 16 percent cannot afford to pay existing staff due to the impact of loan repayments, and nearly 40 percent of affected small businesses said they were due to cash flow concerns.
According to the British Business Bank, lenders have issued 1,670,939 loans worth £ 79.3 billion through Covid’s government-backed loan programs.
Earlier this month, a survey by alternative lender Nucleus Commercial Finance found that two-thirds of SMEs that have taken out a government-backed Covid loan said they will struggle to repay it.
Last month, corporate lender CapitalBox found that 43 percent of SMEs received a government-backed loan during the Covid-19 crisis, while a similar proportion believe the government could have done more to support businesses.
Continue reading: SME loan volume fell in the first quarter, but business confidence is returning
