UK small businesses in crisis: running out of cash and need Government support now

Revenue down 76% for small businesses, compared to last year

Our latest research reveals the worrying state of the UK’s small business community two weeks after the UK ‘coronavirus lockdown’ began.

We commissioned YouGov to survey 1,000 leaders of companies with 1 to 49 employees about the financial health of their businesses. 

76% of the small business leaders surveyed said they have already been negatively affected by coronavirus. 

By the end of April, this percentage is likely to rise because 80% of business leaders estimated their company’s revenue would decline in April 2020 compared to April 2019. Distressingly, 36% expect their revenue to decline by 90% or more if all business remain closed.

Worst hit are hospitality, leisure and retail 

The leaders surveyed who expect the biggest drop in revenue in April 2020 compared to April 2019 are those with leisure or hospitality businesses. 64% expect to see their revenue dry up completely – a decline of 100%. 

Also understandably pessimistic are business owners in retail, with 38% expecting their revenue to totally disappear (a decline of 100% compared to last year).

Expecting the least impact are the IT and telecommunications businesses we surveyed, with just under a quarter (23%) saying they don’t  expect to see any decline in their revenue compared to April 2019.

Overall UK SME income down 58% for April 2020

If the forecasts we received from small business leaders are correct, we’ve calculated that the collective revenue for small businesses in the UK – including those affected negatively and positively by coronavirus – will decline by 57.6% for April 2020.

This builds on a 20% decline that we saw in revenue coming into Tide accounts in the last seven days of March.

To put this into context of the UK economy as a whole: every year, small businesses contribute around £1.5 trillion (37%) to the turnover of the UK’s private sector. The decline in revenue for small businesses forecast by our survey would lead to a 21% reduction in the total UK private sector turnover in April 2020 (assuming income is even across the year).

The decline for the entire UK private sector turnover will of course be greater when the declines for medium and large businesses are included.

Money is running out

Our research also reveals that around 38% of small businesses have only enough in their cash reserves to tide them over for 6 weeks or less:

• 19% reported cash reserves that will last 3 weeks or less
• 19% reported cash reserves that will last 3 to 6 weeks

These small businesses are relying on Government support, such as a grant or loan, but many haven’t received any money, nor been given a date when they will get the money. Time is running out for these businesses and without help from the Government very soon, many small businesses will be forced to shut down or go bankrupt.

Government must act quickly  

We at Tide are worried about how our 150,000+ members and the UK’s small business economy will survive. Our CEO, Oliver Prill, said: 

“As a banking platform dedicated to supporting small businesses, we are extremely concerned about the health of the SME community at this time. From talking to many of our 150,000 members, we knew the situation was difficult but this survey has revealed just how tough it is, and how much harder it’s likely to become for small businesses to see out coronavirus.

“The Government’s support for small businesses is very welcome and much needed. It has the potential to make a huge difference in helping small businesses survive. We now want to see more focus from the Government and other organisations involved in delivering financial support. We ask them to do everything possible to get the money into the hands of small businesses owners as soon as possible.”

Find out if your business is eligible for Government support

To help you to find out what Government support your company might be eligible for, we’ve developed a checker chatbot. Any business owner can use the eligibility checker: self-employed, sole traders, limited companies and larger organisations.

Go to eligibility checker »

Have your say

How is the coronavirus affecting you and your small business? We’re keen to hear from you – get in touch with us on LinkedIn, Facebook or Twitter.

All figures unless otherwise stated are from YouGov PLC. Total sample size was 1002 senior decision makers in small businesses. Fieldwork was undertaken between 31 March to 3 April 2020. The survey was carried out online. The figures have been weighted and are representative of all UK business sizes.

Main photo by Alex Iby on Unsplash
Other photo by Tim Mossholder on Unsplash