PROSPER MAGAZINE: DIGITAL EDITION
BLACK COUNTRY 2.0
COVID-19 ONE YEAR ON: COST TO UK SMES TO EXCEED £126.6 BILLION, DOUBLE LAST YEAR’S PROJECTION
New data reveals the impact of Covid-19 to UK SMEs is set to exceed £126.6bn – nearly double the £69bn initially projected a year ago.
SMEs have lost £15,673 so far on average, but expect the total cost to reach £22,461, suggesting losses will continue for some time yet.
Over 840,000 SMEs don’t believe their business will ever return to pre-pandemic levels
81% feel they haven’t had enough government support, and over 2.2 million still haven’t been able to access government support or grants.
Last month, as we approached the anniversary of the first national lockdown, a new report revealed the cost of Covid-19 to UK SMEs is set to exceed £126.6 billion – nearly double the £69 billion initially projected a year ago.
The study by small business insurance provider Simply Business revealed that on average, SMEs have lost £15,673 each so far in earnings due to the pandemic and subsequent lockdowns, up from the £11,779 small business owners initially estimated that Covid-19 would cost in May last year.
The financial impact on SMEs
A year into the global pandemic, SMEs now fear they will lose a total of £22,461 each on average, suggesting there are still more losses to come. Almost one in 10 (8%) expect the pandemic to cost them over £50,000 in total.
What’s more, over 840,000 SMEs are not sure their business will ever return to pre-pandemic trading levels, bringing a huge blow to both the small business community and the UK economy.
With six million SMEs in the UK, accounting for over 99% of all businesses, 33% of employment and 21% of all economic turnover, the total cost of Covid-19 to UK SMEs – set to exceed £126.6 billion – has the potential to send ripples through our economy and communities.
A lack of government support?
Overall, 81% of SMEs still say they haven’t had enough support from the government – with 41% saying they don’t feel supported at all and 40% believing they’ve had some support but not enough.
In terms of financial support, over 2.2 million SMEs (37%) still haven’t been able to access government schemes and grants, seen by many as a lifeline to help small businesses through the pandemic.
For those that have been able to access government support, a third (33%) have been able to receive the Self-Employed Income Support Scheme, a quarter (26%) have utilised the Bounce Back Loan Scheme, and one fifth (18%) have accessed the Local Restriction Support Grant.
So far, only one in 20 (5%) have been able to make use of the business rates holiday, and just 3% have been able to use the Coronavirus Business Interruption Loan Scheme. Despite the government offering a range of financial schemes to support small businesses, it’s clear that many haven’t been able to access the vital help needed for their recovery.
What small businesses needed from Government
Well over two fifths (46%) of SMEs believe the government should have offered a wider range of financial support schemes – highlighting how difficult small business owners have found it to access the schemes on offer.
One quarter (24%) believe finance should have been released quicker, and the same number feel there should have been greater communication and transparency from the government about the impact on small businesses and the self-employed.
A further 23% of SME owners also believe there should have been more clarity around restriction and regulations within their industry, and one in 10 (9%) think the applications should have been easier to fill out.
Emerging from lockdown
Looking ahead, roughly half (54%) of SMEs believe the government’s roadmap out of lockdown has given them some level of reassurance to start planning the future of their business – leaving 46% still uncertain in the coming months.
In recouping the money lost during the pandemic, the majority predict it will take anywhere from 18 months to two years (18%), or two to three years (20%) to get back the money lost.
One in five (20%) think three years or more, meaning they might not return to pre-pandemic levels until 2024 or later.
When it comes to returning to pre-pandemic levels of trading, over 860,000 SMEs (14%) are not sure that their business will ever return to pre-pandemic trading levels, but others are more optimistic.
A quarter (25%) believe they will return to pre-pandemic levels by spring or summer 2022. Well over a tenth (14%) think faster, and predict they’ll be back to normal trading levels by the end of this year.
Overall, over half (53%) of SMEs remain concerned about their business’ future but hope to survive until the end of 2021.