The Covid-19 crisis has led to small business owners funding their companies with their own money and becoming more worried about the future, research has found.
A survey from Iwoca has revealed nearly three out of five small business owners (59 per cent) funded their firm with personal money in 2020 as they grappled with the impact of the pandemic and now almost four in 10 (38 per cent) are concerned they will have to close this year.
The lender also conducted a separate survey of accountants, representing over 23,000 small businesses across the UK.
Read more: SMEs chasing £61bn in late payments
When asked for the top five things they want their small- and medium-sized enterprise (SME) clients to focus on this year, 49 per cent said ensuring they are well funded, 48 per cent said getting invoices paid and 31 per cent said diversifying their product offering.
28 per cent thought SMEs should use government schemes and 26 per cent believed they should transition what they can of their business online.
When SME owners were asked the same question, the majority (60 per cent) said they will focus on ensuring they are well funded in 2021.
However, 43 per cent still expect to need to use their own money to finance their businesses this year.
“Using your own cash to fund your business clearly isn’t sustainable for most people,” said Colin Goldstein, commercial growth director of Iwoca.
“The overriding message from both accountants and our survey results is that business owners need to ensure they are well prepared financially for what will be a difficult year ahead.
“As we continue to endure national restrictions, it’s essential that SMEs have access to business loans where dipping into their own pockets is simply not an option.”