Covid-19: Many SME retailers may not survive the next four weeks

Nearly a fifth of SMEs in the UK will not have the cash to survive over the next four weeks, according to research published by The Corporate Finance Network. The findings show that many retailers, which is the sector which has the highest share of SME employment in the UK, will require a substantial cash injection in the coming weeks to keep trading.

The study, which encompassed 13,000 SMEs, predicts that almost four million people will lose their jobs as a result of the UK governments recent lockdown measures, forcing many businesses to close. The accountancy firm added that it expects 31% SMEs to close down by June should the current situation continue for three months or more.

Non-essential retailers have been hit particularly hard by the Covid-19 epidemic, with physical stores forced to close and many consumers reducing discretionary spending. Although the UK government have promised to subsidise wages, there have been reports that businesses have been facing difficulties accessing government backed loans from banks, preventing enabling access to cash.

To try and ensure the survival of SME businesses, The Corporate Finance Network has put a “Rescue and Recovery” plan in place, in which more robust small businesses are encouraged to buy ‘at risk’ companies to ensure their survival in the short term, with a view to turning them back into profitable enterprises once the crisis is over. The network stated that it has asked the treasury to consider its proposal.

Kirsty McGregor, founder of The Corporate Finance Network, said: “Historically, over the last three years in the UK, there has been just over 4,500 acquisitions by SMEs; to save a significant percentage of the UK's economy and keeping almost four million people in jobs, we need to encourage and facilitate 250,000 deals within the next few weeks. We can absolutely do this by incentivising them, supporting them, and with the full backing and incentive of the UK government.”

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