Nearly half of small businesses in the UK are being forced to rely on savings to help stay afloat during the coronavirus pandemic, a new survey has found.
Some 17% of small business owners said they had withdrawn at least £10,000 ($12,386) from their savings and 7% said they had taken out more than £50,000, in the survey by Hertfordshire challenger bank Redwood Bank.
Of these, 3% said they had withdrawn over £100,000 to stay afloat.
This could equate to an estimated total of £22.4bn in savings withdrawn by small businesses across the country, according to the bank’s figures.
Gary Wilkinson, CEO and co-founder of Redwood Bank, said: “COVID-19 has had a significant impact on small and medium sized enterprises (SMEs) who rely on regular income and a healthy cash flow.
“As a result of the lockdown, many businesses have had to shut down their operations to adhere to government guidelines, which has meant revenue has been cut dramatically, but unfortunately bills still need to be paid.
“With no or little income coming in, our findings show many businesses are desperately trying to stay afloat and have had to tap into their hard-earned savings to pay costs and keep going.”
Four in 10 (41%) small businesses have had to close since the beginning of the coronavirus outbreak in the UK, according to a separate survey of 5,471 small business owners by the Federation of Small Businesses in May.
Paying a mortgage or lease on their premises has been a struggle for many small businesses as over a quarter (28%) have failed to make, or faced severe difficulties in making, rent or mortgage repayments as a result of the economic impact of the coronavirus pandemic, the survey found.
A quarter have had to postpone product development plans as the coronavirus has brought the economy to a standstill.
A fifth (21%) of small businesses that export products said they have had to either reduce or cancel international sales.
Of those businesses that have closed, 35% are not sure whether they will ever be able to reopen again.