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UK SMEs concerned about social distancing requirements

UK SMEs will struggle to trade if social distancing measures continue, according to the latest results from the Association of Chartered Certified Accountants (ACCA) UK and The Corporate Finance Network's (The CFN) SME Health Tracker.

Accessing a survey pool of accountants representing nearly 9,000 SMEs across the UK, the findings show that 16% of SMEs on averaged think social distancing measures will make it impossible or unviable to reopen their business.

Notably, only 27% of SMEs have written financial forecasts or business plans that have been reviewed as a result of the Covid-19 pandemic.

Feedback also revealed ongoing worries about accessing finance some 13 weeks into lockdown. For accountants who have made enquiries for the Coronavirus Business Interruption Loan Scheme (CBILS) on behalf of their clients, 37% have been approved, and 21% declined. A third of accountancy respondents said their experience of applying for CBILS has affected their clients’ appetite for further applications, putting them off from doing so.

As small businesses also look to funding through the alternative Bounce Back Loan Scheme, 40% of SMEs report that their Bounce Back Loan amount will not be enough to meet their liabilities over the next 12 months.

Tax deferments are still being used as a stop gap, with 68% of SMEs deferring. Of those, 67% say it’s likely they can meet their tax liabilities in six months.

CFN founder Kirsty McGregor said: “What’s filtering through in this week’s results is a sense that the Bounce Back Loans have worked compared to CBILs. Most of the Bounce Back Loans have been accepted and turned around quickly, which is great news. But the 40% who don’t think this will stretch to meet their needs is concerning. Debt is a massive issue for the future, something which needs careful handling.”

ACCA UK head Claire Bennison said: “What’s filtering through in this week’s results is a sense that the Bounce Back Loans have worked compared to CBILs. Most of the Bounce Back Loans have been accepted and turned around quickly, which is great news. But the 40% who don’t think this will stretch to meet their needs is concerning. Debt is a massive issue for the future, something which needs careful handling.”

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