As UK businesses cautiously return to trading, a review of the last eight weeks of the ACCA UK and Corporate Finance Network (CFN) SME Health Tracker reveals that the lockdown has had a marked impact on SMEs’ financial outlook.

Since early April, the Tracker has gauged SMEs’ financial health when the lockdown officially began on the 23 March 2020. Across the eight weeks, the total survey pool of accountancy practitioners that responded represented over 62,000 SMEs.

Averages across the eight-weeks of data indicate a turbulent time for SMEs, who expressed concerns about their cash reserves and survival, alongside experiences of accessing government support.

On the 15 April, 54% SMEs said they could access cash to last another four weeks of lockdown; this fell to 42% on the 4 May. Conversely, 13% of accountants said their SMEs were trading normally in April, compared to 25% at the end of May.

Tax obligations have also been a concern for SMEs with 58% on average deferring tax payments, with only half admitting to their accountant that they will be able to meet these liabilities in six months.

And as the lockdown continued, more SMEs told their accountants they had decided to fold their business – from 3% in April to 5% per cent on the 26 May.

In the last three weeks, accountant practitioners also reported that their SME clients had shared their worries and concerns with them. 83% of practitioners said their SME clients were feeling more stressed and anxious than usual; 73% said their clients were having trouble sleeping, 67% reported worsened mental health and 50% that their clients had shared feelings of not being able to cope.

Kirsty McGregor, founder of the CFN, says: ‘You can see the impact of the government policies across the time of this tracker, with official announcements changing the mood in the short term. Many of the measures came too late for businesses that have now decided they’re going to liquidate – by the week the Job Retention Scheme opened for applications we were already seeing a spike. The stats also show that a very low percentage of the overall business population is willing to take on any substantial new debt.’

Claire Bennison, head of ACCA UK, says: ‘Over the eight weeks, CBILs have been a hurdle for SMEs: our figures show that just 1% of SME clients progressed to full application with just 6% approved. Also, Bounce Back Loans seemingly had no effect at all on clients’ cash outlook. Some pain points have been avoided for the time being, but the picture in eight weeks could be very different again as SME owners make more tough decisions about how they can move on in still difficult trading conditions.’

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