Over 500,000 British Businesses are at risk of collapse due to the Coronavirus claim Insolvency Experts.
In the first three months of this year, over 509,000 British Businesses were in significant distress according to Insolvency firm Begbies Traynor. Significant distress is one step from critical distress which is when companies fold and go into liquidation or administration.
The majority of the 509,000 Businesses are Small Businesses. Small Businesses are those with less than 250 employees in the UK.
The government’s policies to help small businesses during the coronavirus pandemic have come under close scrutiny. Pledges to back the UK’s Small Businesses were well received a few weeks ago.
Those pledges have yet to come to full fruition. UK Banks have been ordered by the Bank of England to speed up their loan application processes to help Small Businesses. Hundreds of thousands of loan applications have been made by Small Businesses yet only a small percentage have been actioned.
A major problem for Small Businesses is that because the courts have been put on lockdown, they are not able to take action to recover monies owed to them. Unfortunately Creditors have been handcuffed by the system designed to protect them. However Small Business Debt Collection Agencies are continuing to operate.
The overriding objective is to protect the public safety, that cannot be argued. The fact that some companies are not paying their suppliers on time is further exacerbating the problem say Small Business industry insiders.
One of the partners at Begbies Traynor, Julie Palmer said “The coronavirus pandemic is a true ‘black swan’ event that has decimated short term business financial performance.
“Although it is still early days and with no end to the lockdown in sight things could get much worse, with the Red Flag research highlighting landmark levels of financial distress already.
“While the loss of a business is devastating, UK business owners are talented entrepreneurs and after coronavirus will find opportunities. At this moment, we just have to anticipate what those opportunities are.”