The coronavirus pandemic is causing SME owners in the UK to take drastic steps to keep their companies afloat, according to a new survey, with one in seven SME owners forced to use their personal savings to help their struggling business survive.
Small and medium sized businesses (SMEs) in the UK have come under intense pressure during this global crisis, with many under risk of shutting permanently.
Some 14 per cent of SMEs owners have had to use their personal savings for immediate financial support during the pandemic, according to a survey conducted by Opinium for Nucleus Commercial Finance.
Of the 503 business-owners surveyed, 44 per cent said that their companies had been negatively impacted by coronavirus and the subsequent lockdown.
A quarter of this group have already extended an existing loan or finance facility or have already taken out a new one, while seven per cent have applied for additional financing.
The government introduced the so-called bounce back loan scheme after facing criticism that its Coronavirus Business Interruption Loans were not accessible to smaller firms.
But UK lenders have reportedly warned that up to half of the bounce back loans may never be repaid.
Chirag Shah, chief executive of Nucleus Commercial Finance, said it was “alarming” that SME owners were having to using their own savings.
“While some owners might believe that this is the best option for short-term cash flow needs, taking this measure can have a detrimental effect on the business and also their personal situation, especially if activity does not improve immediately once lockdown measures are eased.”