Yahoo Finance Coronavirus: UK businesses owed £133bn since lockdown began
As coronavirus lockdown restrictions begin to ease and many UK businesses start to reopen and return to work this month, firms are still waiting for £133bn ($166bn) for work done before the lockdown began in March, new research has found.
A huge 90% of businesses have not yet been paid for work done pre-lockdown, according to the research by fintech business lender MarketFinance.
Firms are missing average of £148,917 and 81% are also expecting to wait longer to be paid for the goods they provide and work they do from now on.
Half expect to be waiting anywhere between 14 and 30 days beyond the normal term of 45 days, and 15% fear they could be waiting anywhere between 3 and 6 months longer to be paid for work.
Only 43% of businesses that applied for support from the Coronavirus Business Interruption Loan Scheme (CBILS) were successful in securing it.
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The typical loan received by businesses was £211,667, though they applied for almost double this amount.
Almost half (45%) of business owners expect to return up to half of their furloughed staff to work in July but a quarter are likely to be kept on furlough as part of the extended scheme amid the economic uncertainties caused by the impact of the coronavirus pandemic.
The future remains less certain for the remaining quarter of furloughed staff, who could lose their jobs entirely.
For businesses that have a physical location such as an office or warehouse, over two-thirds (68%) are negotiating rent reductions with landlords whilst a third have decided to leave their premises entirely so that they can continue working from home.
While 19% of firms anticipate an increase in sales of up to 50%, one in six (15%) expect a decrease in sales of more than 75% as they reopen in the coming weeks.
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Looking in the long term, the majority (57%) believe it could take as long as one to two years for business to return to normal levels.
Although some business owners reported feeling optimistic about the future, with 45% feeling that there is pent up demand for their products and services, 60% feel exposed to conditions beyond their control, citing the lockdown, cash flow strain, recession fears and a no-deal Brexit as concerns.
Anil Stocker, CEO at MarketFinance, said: “The reopening of the UK’s high streets marked the first buoyant moment for UK businesses in months but it might well be the calm before the storm.
“Businesses are facing a three-pronged assault on their finances. Its alarming that only half of their CBILS loans are being granted, then we learn that they have close to £150k in outstanding payments since the lockdown began and now, it’s likely that they will have to wait twice as long to get paid for new work they do whilst demand and economic activity normalises.
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“This coupled with a very moderate outlook for trading conditions, ‘rent quarter day’ this week and uncertainty about their workforce, no doubt this will put further pressure on businesses.”
