The Corporate Finance Network, representing some of the UK’s most proactive and commercially astute larger, regional accountancy firms, has undertaken further research in respect of 10,000 of their SME clients, which now predicts that in the next 2 weeks, as a result of the COVID-19 lockdown, 20% of these businesses will “probably” or “definitely” run out of cash in the next 2 weeks unless the Government brings other solutions to protect businesses and jobs.  0.4% have already closed their business down permanently.

This research also predicts that 26% of all SMEs will not be able to survive a further lockdown of 4 weeks, despite the overhaul of the emergency loan scheme by the Government.  This is an increase from 18% which was report last week.  It has been collated by ten independent accountancy firms, who are all experts in SME Finance and have in-depth knowledge of their clients’ latest financial and cashflow situation.  All ten of the responding firms believed that the CBILS amendments had not made a significant difference to the ability of their clients to access cash.

Founder, Kirsty McGregor, is urging the Chancellor and the Treasury to announce additional and alternative solutions, to protect these businesses, or if that is not possible, to focus other resources on protecting the 23 million employees who are currently working for some of these struggling private sector businesses.

She explains “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.”

Kirsty McGregor, founder of The Corporate Finance Network continues: “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.”

ACCA, the global professional accounting body, have agreed to take on the task of updating this piece of research, through their wider membership of practising accountants.  This will enable this barometer of SME health to become a regular weekly report, so that Government can have up to date information, delivered by experienced professionals who are dealing daily with these business’ cashflow problems, right on the front line.

Claire Bennison, head of ACCA UK concludes: ‘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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