The latest research looking at the expected impact of COVID-19 on small firms in the UK has revealed that the virus and lockdown could lead to accumulated debt totalling billions of pounds.
This research was by the Recapitalisation Group at TheCityUK and it suggests that UK SME debt will hit anything from £90bn to £105bn by March of next year due to these factors. The group argues that this could make recovery for the economy impossible, as well as leading to investment, development, and research problems and causing widespread unemployment.
Part of this debt will be repayments for the Coronavirus Business Interruption Loan Scheme (CBILS) set up by the government, with that expected to account for a maximum of £20bn.
Among the options that smaller firms will have to deal with virus-related debt are to restructure it or to try to secure new sources of equity. Seeking the advice of an accountant for small business in South Yorkshire, or whatever part of the country they are based in, will also be a sensible move for firms in this position.
The leadership council chairman of TheCityUK, Adrian Montague, has written to the governor of the Bank of England to urge help for small firms, sole traders, and family companies. He has pointed out that few of them have the links with wealthy investors that could provide them with significant equity, and argued that further government support will be needed as they are crucial to UK economic health and local employment.