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April 7, 2020

CFN: 20% of UK SMEs set to collapse within the next two weeks

By Joe Pickard

Research conducted by the Corporate Finance Network (CFN) predicts that as a result of the Covid-19 lockdown, out of 10,000 of their SME clients, 20% will ‘probably’ or ‘definitely’ run out of cash in the next two weeks.

According to the research, 0.4% of those businesses have already closed down permanently.

The research also predicts that 26% of all SMEs will not be able to survive a further lockdown of four weeks, despite the overhaul of the emergency loan scheme by the UK Government.

CFN founder Kirsty McGregor has urged UK Chancellor Rishi Sunak and the treasury to announce additional and alternative solutions to protect these businesses.

McGregor said: “When the Chancellor said on 17th March that he would do ‘whatever it takes’ and that businesses should not make any hasty decisions, most business owners trusted him. However, three weeks have now passed and millions of these businesses don’t feel supported, and are having to make judgements about what to do next to protect themselves and their family from personal ruin and potentially ‘wrongful trading’ claims against them, which if found true, can bring disqualification and even a prison sentence.

 “Every business is, understandably, under incredible pressure right now, and some business owners don’t want to have that responsibility any longer.

“We have suggested some additional solutions which have been passed to the Treasury, which can focus on protecting the employees of the failing businesses and support the stronger businesses. We urge the Treasury to make some swift decisions because these business owners do not have the luxury of being able to be patient.”

The Association of Chartered Certified Accountants (ACCA) has agreed to update the research of the CFN through its wider membership of practising accountants. This will enable this barometer of SME health to become a weekly report which can be used by the UK Government.

ACCA UK head Claire Bennison said: “We’re pleased to be working with The CFN on this research drawing from the accountants and advisers who are working hard to support them access available support. We already know from our ACCA members that the biggest need right now for SMEs is the speed of this support. Things are moving very fast for this embattled sector, and practical policies and solutions need to keep pace.”

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