Two thirds of SMEs face coronavirus cashflow crisis

More than two thirds (69 per cent) of small – and medium-sized enterprises (SMEs) have reported “significant pressures” on their cash levels as a result of the coronavirus as the outbreak spreads in the UK.

According to new research from business finance platform MarketFinance, SMEs are struggling with a combination of market uncertainty, stockpiling supplies, and fears of transport disruption due to quarantine measures.

This has been compounded by ongoing issues such as late or delayed payments – almost three quarters (74 per cent) of business owners told MarketFinance that invoices which were due to be settled at the end of February are now not likely to be settled before the end of March 2020.

Read more: SME lenders: Coronavirus could be worse than financial crisis

More than a third (36 per cent) of SME owners said they feared their business won’t make it to Easter unless they are able to secure some sort of finance.

“The impact of the coronavirus spread is being felt by SMEs across the UK as finance and supply chains are disrupted,” said Anil Stocker, chief executive at MarketFinance.

“At the best of times, only around half of these businesses are cash flow positive. Today, businesses are feeling a palpable sense of helplessness and isolation and there is a lack of specific information on how to cope with the crisis.

“At the moment cash is king and if businesses are being starved of this cash, it will leave them stranded. Whilst policy efforts play out to contain the spread of coronavirus, business owners should brace themselves for some turbulence and have a prepared mindset for the scenarios ahead.”

Stocker called for the chancellor Rishi Sunak to “prove that he is a champion of UK SMEs” by using his first Budget to help small businesses.

Read more: SMEs hope for coronavirus support in ‘small business Budget’

“There is a role for government to work with businesses, banks and other lenders to ensure a resilient economy,” Stocker said.

“It will be the smallest businesses that are most hit as they have the least bargaining power in global supply chains. They could, for example, give businesses VAT / tax ‘holidays’ to ensure that they have enough money to cover immediate costs.”

The Budget will be announced at 12.30pm today (11 March).

Read more: P2P lenders lay out requests for the new Budget