Over a third (35 per cent) of small- and medium-sized enterprises (SMEs) are concerned about their ability to repay Covid financial support, research has found.
An EY survey of 712 UK SMEs has found 88 per cent received financial aid from lenders or the government and 51 per cent described recovering from the pandemic as one of the ‘main challenges’, indicating that they will likely require ongoing support.
Just under half (46 per cent) of UK SMEs have plans to adjust their business models and go more digital in response to changing market conditions.
81 per cent of SMEs said they were detrimentally impacted by the Covid, with 61 per cent saying their supply chain was comprised, 58 per cent seeing a drop in revenue and profit margin and 57 per cent reported a fall in sales volumes.
“Businesses of all sizes have been impacted by the pandemic, but SMEs have disproportionately suffered, with large numbers relying on financial support just to survive,” said Anita Kimber, UK financial services partner and EMEIA business transformation leader at EY.
“While the worst of the health aspect of the pandemic is hopefully now behind us, economic recovery remains a huge challenge, and is being acutely felt by many small firms that are now concerned with how they will repay their debt.
“At this important juncture, it’s critical that all financial services providers continue to do everything they can to support SMEs through the recovery effort and beyond, offering personalised recovery planning and seizing the opportunity to get a deeper understanding of these businesses.
“Continued financial and business support that is easily accessible and offers fast access to funding when required will be fundamental for UK SMEs as they get back on their feet and look beyond recovery, to growth.”
Last month, cloud accounting provider FreeAgent found around 168,200 small UK businesses are likely to close within the year as three in five feel the negative impact of the pandemic.