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SMEs raise concerns as Covid-19 loans run low

Small- to medium-sixed businesses (SMEs) have raised concerns about finances moving forward amid the ongoing novel coronavirus (Covid-19) crisis, as the government prepares to end certain support schemes.

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The deadline for the Coronavirus Business Interruption Loan Scheme is the end of September

Research from MarketFinance found that while more than 1.2m SMEs took on a Bounce Back loan to pay suppliers or set up ecommerce and online shopping channels, they only have an average of the loan £9,106 remaining.

Of the 2,000 companies that took part in the survey, over three quarters say that they would be keen on Coronavirus Business Interruption Loan Scheme (CBILS) to further support their business, but 63% were unaware the initiative concludes at the end of this month.

Other key concerns include that two thirds of respondents are still waiting to be paid for work done before lockdown began in March, while 65% say a second mass lockdown would severely hit their business.

Aside from Covid-19, SMEs cite Brexit as a major concern, with two thirds saying that a no-deal exit presents huge risks for their business, including not having an available workforce, relevant information to guide them on how to do business and the impact on supply chains at borders.

Initiatives like the CBILS offer similarly unprecedented access to fee and interest-free funding - but only for a limited time

Anil Stocker, chief executive of MarketFinance, comments: “The Bounce Back Loan Scheme was a good short term fix for SMEs. It provided the necessary support during the lockdown but looking ahead, the CBILS cash will provide the impetus to do more.

“Not having the cash flow to sustain businesses at the back end of the year, could be disastrous for many of these SMEs.”

 As such, Stocker says SMEs must start looking beyond “simply survival” and begin evaluating how they can adapt their business to these Covid-19 conditions.

“There might be new ways to change the business model and get growth going again.; securing government-backed funding now, before the deadline, is an opportunity for businesses to access the working capital they need to build for the longer term,” he says.

“The idea of these being unprecedented times has been thrown around a lot this year. Initiatives like the CBILS offer similarly unprecedented access to fee and interest-free funding - but only for a limited time.”

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