Thousands of small businesses that borrowed state-backed coronavirus loans are unable to make repayments because of limited cashflow, a survey has found.
A YouGov poll commissioned by Lawbite, and first reported by CityAM, showed 59 per cent of UK small- and medium-sized enterprises (SMEs), equating to around 3.5m businesses, used loans from the government support schemes or the furlough scheme during the pandemic.
At least one in every 10 of SMEs can now not repay because of the effect of cashflow and supply chains and almost a quarter of affected SMEs said late payments have impacted their supply chains.
Around 18 per cent of SMEs plan to make redundancies, 16 per cent cannot afford to pay existing staff because of the impact of loan repayments and nearly 40 per cent of affected small businesses reported that they can’t invest in new technology or products due to cashflow concerns.
According to the British Business Bank, lenders have delivered 1,670,939 loans worth £79.3bn through Covid state-backed lending schemes.
Earlier this month, a survey from alternative lender Nucleus Commercial Finance found that two-thirds of SMEs who took out a state-backed Covid loan said they are going to struggle to pay it back.
Last month, business lender CapitalBox found that 43 per cent of SMEs received a state-backed loan during the Covid-19 crisis while a similar proportion believe the government could have done more to support businesses.