ICAEW Coronavirus SME Impact Survey May 2020
7 May: ICAEW members have backed the package of coronavirus support measures for small business but warned that without flexibility and imagination from government many SMEs face a cashflow cliff edge in the coming months.
We asked our members working in SMEs how their businesses had responded to the economic disruption of the past six weeks – and what they would need to do to survive until the lockdown is lifted.
An online survey was sent to senior members working in SMEs across every economic sector and UK region. The survey was available from 30 April until 5 May. 517 responses were received in total.
To get through the current situation, business have reduced their costs and applied for the government scheme/loans
- Two thirds (65%) have applied for cash from one of the government’s schemes
- Many have cut discretionary spending (65%), fixed costs (34%), reduced salaries and bonuses (38%) and put staff on paid leave, funded by their company (30%) and/or reduced their hours (21%) to protect business and jobs
- Some of them changed their business model (16%)
- And very few had redundancies (11%)
Some key government support measures have been successful, including the furlough scheme, grants from local authorities and the business rates holiday
- 92% of businesses had applied for the Coronavirus Job Retention Scheme (CJRS), with 75% of those already in receipt of those funds from the Government
- A further 92% had applied for coronavirus business support grants for small businesses and for retail, hospitality and leisure businesses – administered by Local Authorities.
- 91% of firms had also taken a 2020/21 business rates holiday for retail, hospitality and leisure businesses and nurseries;
- 87% of firms had deferred VAT payments;
- 70% had accessed HMRC time to pay scheme
- The majority of these Government-backed schemes had been paid out
The Coronavirus Business Interruption Loan Scheme (CBILS) has been slow to provide cash to small businesses
- In terms of loans two thirds (66%) had applied for Coronavirus Business Interruption Loan Scheme but only 20% received the money for this loan
- 40% had applied for Coronavirus Large Business Interruption Loan Scheme (launched 4 May 2020), with 17% applying for Bounce Back loans (launched 4 May 2020)
Most small businesses are using their reserves of cash to get them through the crisis
- Over three quarters (78%) of businesses are using their existing reserves
- Around a half are deferring taxes eg, VAT, time to pay scheme (49%)
- And a similar proportion (47%) are gaining cash from 'Business as usual’ activities
As many SMEs are relying on their reserves (and have already cut their discretionary spending), a quarter could be out of cash by July
- Most SMEs (73%) have enough cash for at least three months or more, but a quarter will run out it by July
Businesses will need increased demand for their products and services, flexibility to retain staff, and ongoing government support to recover
- Once lockdown is eased, many (57%) will require the ability to implement social distancing in the workplace, (49%) ability to furlough staff at reduced hours and (40%) continued Government support measures
- The majority (64%) would also need increased demand for their products/services
ICAEW sources on coronavirus seen as useful
- To help them through the crisis 41% had used our website, and a third had used our coronavirus hub and/or daily email. Of those that had used our coronavirus hub and daily email, 99% have found them helpful.