ACCA UK and The Corporate Finance Network (The CFN) have said accountants are “striving” to secure loans and cash to SMEs and fear it may not arrive fast enough.
The bodies’ weekly tracker of SME health reveals that a third of businesses will probably not be able to access the cash they need to last more than two weeks of lockdown (33%).
The tracker also found that with lockdown set to last another four weeks, respondents estimate that 38% of the businesses they advise will definitely not be able to access the additional cash they’ll need to survive, compared to 26% in the previous tracker.
The latest update about the impact of Covid-19 on SMEs shows over one in 10 clients have already had to liquidate/ dissolve their company with 92% of private sector members surveyed not having yet made a CBILS application, although 42% say they may have to apply soon. A further 7% have had an application rejected.
Head of ACCA UK, Claire Bennison, said: “Our member’s helpline is being contacted by accountants working with SMEs, striving to secure loans and cash. What they’re experiencing is frustrating for all involved – delays and administrative complexity that undermines the rescue package that’s being offered.
“We totally understand solutions are having to be found at pace, but there’s a rising sense of distress as SMEs face the challenge of working out how they’ll pay their teams over the coming weeks.”
Kirsty McGregor, CFN’s founder, added: ‘This is now the third week of this tracker, and we’re not seeing any improvement for SMEs filter through the system. The announcements don’t translate into cash for businesses. I am also really worried that the HMRC Job Retention grants won’t be received by businesses before their April payrolls are due to be paid.
“Somehow, we need to find the much-needed ability to get cash moving, this week. It’s understandable that banks need to do their due diligence and check their processes and systems, but something immediate needs to happen that solves the limbo many SMEs are finding themselves in.”
ACCA UK and CFN are recommending that real-time analysis needs to be done by fiscal policy makers to analyse the effectiveness of the measures put in place. Stimulus and support measures must be kept open and flexible in order to mitigate the biggest risk faced by economies as the impact of the crises evolves.
McGregor concluded: “The banks are still well behind any real movement, perhaps due to the sheer scale of what needs to be done. We understand this is a very fast-moving situation, but what’s needed is short term finance with cash reimbursement.
“Ultimately, loans are taking too long and while the banking sector gets itself organised, we need immediate cash flowing to SME’s so they can support their employees.”