Quarter of Scottish SMEs see takings drop 70% amid Covid-19

More than a quarter of small and medium-sized enterprises (SMEs) in Scotland have seen a decrease of more than 70 per cent of their income due to the Covid-19 pandemic, according to a new report from lender Aldermore.

Aldermore says the road ahead will be hard, but 'can be overcome with the right help and support'. Picture: Ian Rutherford.

The specialist bank, which offers personal and SME business banking, said Scotland came in higher than the UK-wide figure for such a hit to their income – at 27 per cent and 25 per cent respectively.

Additionally, the average SME in Scotland has lost about 40 per cent of its income as a consequence of coronavirus, also higher than the 34 per cent figure across the UK.

Aldermore found that for the UK as a whole, the hardest-hit businesses have been in the hospitality and leisure industry with an average loss of 53 per cent of their income followed closely by food and drink with about half.

Most UK SMEs estimated that their business would see long-term damage – or even closure – if conditions did not return to normal in the next five months. One in ten has already seen impacts it expects to last for the long term – and 3 per cent were planning to close.

Tim Boag, group MD, business finance at Aldermore, said firms are having to survive in an environment that “has never been more challenging or uncertain”.

He added: “The situation is continuously changing, and many SME business-owners are having to swiftly adapt by finding ways to diversify their products and services, as well as cutting costs, managing supply-chain arrangements, and furloughing staff in order to survive.”

North of the Border, 5 per cent of SMEs said the health of their business has already seen long-term damage, while steps they have been taking as part of their Covid-19 response include cutting operating costs and discretionary spend, and furloughing staff – options each cited by about a third of respondents.

Other measures include withdrawing savings (14 per cent) and applying for a Coronavirus Business Interruption Loan (12 per cent). Furthermore, nearly two thirds of Scottish SMEs have been looking at ways to boost income, for example by shifting more business online (14 per cent). A third have adjusted their business plans to reflect the “new normal”.

Giving cause for optimism, 8 per cent of UK SMEs say they may even see an increase in business revenue as a result of Covid-19.

Boag also said: “As a bank borne out of the last financial crisis, we know the road ahead will be a difficult one, but that it can be overcome with the right help and support.

“Aldermore continues to work with business customers to respond to their needs and provide funding solutions wherever we can; including the Coronavirus Business Interruption Loan Scheme for asset finance and soon invoice finance. We continue to engage with and influence a range of industry stakeholders in order to help businesses survive during this time of great uncertainty.”

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