Over four-fifths of UK midcaps have just nine months funding left
Over four-fifths of the UK’s medium-sized businesses will not be able to continue trading for more than nine months under current funding arrangements, a new survey from accountants BDO has found.
The 500 medium sized businesses have on average borrowed £21m in loans as a result of the coronavirus pandemic, the data showed.
Of these, 90 per cent said they were planning on paying the full amount back, but the remaining 10 per cent have said they will not be able to.
In addition, an overwhelming majority – 91 per cent – of firms have made staff redundant as a result of the pandemic, the survey showed.
Of these, most have made just a small number of cuts, but almost a third (29 per cent) have been forced to axe a fifth of their employees.
The cuts have been made event though the government’s job retention furlough scheme is running until the end of October.
Although the unprecedented nature of the current crisis has hit businesses hard, there were some encouraging signs of longer-term resilience in the data.
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A third of businesses were either unaffected or increased revenue in recent months despite the lockdown disruption, while 26 per cent had launched new products or services.
And most – 65 per cent – of firms said they expect a recovery from coronavirus in between one and three years.
Furthemore, 73 per cent of medium-sized businesses said they intended to take on more apprentices after the government’s bonus scheme announcement.
Last month, chancellor Rishi Sunak said that from August to January, any firm that hires a new young apprentice aged 16 to 24 will receive £2,000, while those that hire new apprentices aged 25 and over will be paid £1,500.
Two-thirds of firms said they would take advantage of the £1,000 bonus for every member of staff retained from furlough.
BDO managing partner Paul Eagland said: “History tells us that the level of resilience of the mid-market will be key to economic recovery.
“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.”