Majority of medium-sized businesses need more funding to stay afloat, survey shows
According to new research, a majority of UK’s medium-sized companies can only continue to trade for up to nine months with the current funding arrangements.
BDO’s second Re-thinking the Economy survey of 500 medium-sized businesses across the UK has revealed that medium-sized businesses have each taken an average of £21 million in loans as a direct result of COVID-19.
While most companies plan to repay the debt, 10 per cent do not expect to be able to pay the full amount back.
BDO found that as many as 87 per cent of UK medium-sized businesses will struggle to trade with current funding arrangements.
Asked about their staffing worries, 91 per cent of companies admitted to making redundancies due to the coronavirus crisis.
While most businesses have made a small number of cuts, just under a third have already made around a fifth of their workforce redundant, despite the government’s Job Retention Scheme running until the end of October.
However, the findings also point to some early signs of recovery and resilience within the mid-market.
A third of businesses (33 per cent) were either unaffected or increased revenue in recent months, and over a quarter (26 per cent) had launched new products or services. Seventy-three per cent of medium-sized businesses said they intended to take on more apprentices after the government’s bonus announcement.
“History tells us that the level of resilience of the mid-market will be key to economic recovery,” said Paul Eagland, managing partner at BDO.
“This data shows us that, while challenges remain, businesses have acted decisively to protect themselves and weather the storm. Some businesses have taken on large amounts of debt to survive the crisis, which prefaces a long road to recovery.”
Mr Eagland opined that the entrepreneurial spirit of the UK’s ambitious mid-sized businesses has not been completely dampened.
“At the same time, some companies will use this as a moment to rethink their operations and business models,” he said.
“With many launching new products or services during lockdown and others aim to create the next generation of workers using the new apprenticeship funding.”