Most of the UK’s medium-sized companies say they only have sufficient funding to continue trading for the next nine months, although a third say they are starting to recover from the impact of the Covid-19 disruption, according to research by BDO
BDO’s second survey of 500 medium-sized businesses with revenue between £50m-£350m across the UK found each has taken an average of £21m in loans as a direct result of Covid-19. While most companies plan to repay the debt, 10% do not expect to be able to pay the full amount back.
Asked how long their businesses could continue to trade with the current funding arrangements. 87% said they expect to be able to continue for up to nine months.
The research also showed 91% of mid-sized businesses have made staff redundant due to Covid-19. While most businesses have made a small number of cuts, just under a third have already made around a fifth of their workforce redundant, despite the coronavirus job retention scheme running until the end of October.
However, the findings also point to some early signs of recovery and resilience within the mid-market. A third of businesses (33%) were either unaffected or increased revenue in recent months and over a quarter (26%) had launched new products or services.
Almost threequarters (73%) of medium-sized businesses said they intended to take on more apprentices after the government’s bonus announcement.
There was also clear support for the government’s furlough bonus scheme, with two-thirds (67%) of businesses saying they were now planning on either bringing back all staff or a larger group of staff than originally intended as a result of the bonus.
However, mid-sized businesses expect it to take a while to get back to pre-pandemic conditions. Over half (65%) of respondents predict it would take the economy between one to three years to recover from the impact of Covid-19.
Paul Eagland, managing partner at BDO, said: ‘History tells us that the level of resilience of the mid-market will be key to economic recovery. This data shows us that, while challenges remain, businesses have acted decisively to protect themselves and weather the storm. Some businesses have taken on large amounts of debt to survive the crisis, which prefaces a long road to recovery.
'But at the same time, some companies will use this as a moment to rethink their operations and business models.
‘Thankfully, the entrepreneurial spirit of the UK’s ambitious mid-sized businesses has not been completely dampened, with many launching new products or services during lockdown and others aim to create the next generation of workers using the new apprenticeship funding.’