European small business lender Iwoca and Nucleus Commercial Finance have issued separate warnings about the future of small- and medium-sized enterprises (SMEs) as the furlough scheme comes to an end.
Newly-released research by Iwoca has found that two in five small business owners are concerned that employees will choose not to return from furlough, while one in six small businesses think half of their furloughed staff will choose not to return to work.
Meanwhile, Chirag Shah, chief executive of Nucleus Commercial Finance, warned that the end of the furlough scheme will “have a significant impact on business up and down the country”. He has predicted that many SMEs will require further financial support as the pandemic continues, and said that the alternative lending community could play a key role in providing this funding.
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“Although the outlook is more positive than it has been for some time, we’re not over the worst yet,” said Shah. “The [furlough] scheme’s end could leave many SMEs struggling to survive and exacerbate the financial and mental health challenges many business owners have faced over the last 18 months.
“Moving forward, government and industry must work together to communicate the support available to SMEs and demonstrate how they can help businesses thrive beyond the pandemic. This is where the alternative finance industry has a crucial role to play, in providing businesses with the flexible finance they need at speed, to help them deliver on their ambitions.”
The latest government figures suggest that 1.6m employees remain on furlough, and over 520,000 businesses have made use of the furlough scheme in one form or another since it began in March 2020.
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“The furlough scheme has been a lifeline for hundreds of thousands of jobs across the UK, but it’s concerning how many small business owners who still have people on furlough fear that their staff won’t return when the scheme ends,” said Seema Desai, chief operating officer at Iwoca.
“Managing staff turnover often requires significant time and effort, and it is likely that many small business owners will have to make this investment in the coming months in order to keep growing their businesses.”
The furlough scheme will officially end on Thursday 30 September 2021.