Eight in ten small business owners losing sleep over continued impact of Covid on business

Eight out of ten (79%) small business owners surveyed are regularly losing sleep due to worries about the impact Covid-19 continues to have on their businesses, according to new research out today. Building back business: tackling small business debt in the wake of Covid-19 from the Money Advice Trust, the charity that runs Business Debtline, reports that many self-employed people and small businesses are continuing to struggle with the financial impact of Covid.

Based on findings from a survey of callers to the charity’s free Business Debtline service, which took place before the recent heightening of pandemic measures, the report shows that while many self-employed people and small business owners are feeling a slow return to normality, others are facing an increasing burden of debt. A significant proportion of callers to the service continue to struggle to meet day-to-day personal and business costs, including repaying Government-backed loans, and fear for the future of their business.

Struggling to bounce back

The financial impact of Covid has not been felt equally amongst small business owners, according to the research. Many are getting back on their feet, however a significant proportion, continue to struggle.

  • Six in ten (62%) said they had fallen behind on one or more business related bill as a direct result of Covid.
  • Three out of four (75%) were behind on one or more credit commitment.
  • Over half (55%) reported falling behind on at least one household bill, with energy bills (25%) the most common.
  • While half (48%) of small business owners surveyed that had taken out a government-backed Bounce Back Loan said they could not afford to repay it.

Concerns for the future

For most small business owners surveyed (78%) the future of their businesses remained a concern. Two in five (38%) were not sure how long they could continue to trade for, with worries about repaying debts, keeping up with bills and whether trade would recover to pre-pandemic levels.

Many felt the worst is not yet over – two in five (42%) thought it very likely that they will experience another drop in income in the next the year.

Further support needed

With self-employed people estimated to have contributed £316 billion to the UK economy last year alone, the charity is calling for further action from Government, regulators and creditors to support their recovery.

Recommendations include:

  • The Government should work with the British Business Bank and lenders to ensure a fair and affordable approach to recovering Bounce Back Loans.
  • Creditors should offer specific forbearance to self-employed people struggling to repay Covid-related debts.
  • The Department for Work and Pensions should review the support available to self-employed people on the lowest incomes, including reviewing the Minimum Income Floor in Universal Credit.

Joanna Elson CBE, chief executive of the Money Advice Trust, the charity that runs Business Debtline, said: “Covid-19 has had a profound impact on the finances of self-employed people, and it’s clear for many small businesses, the crisis is far from over.  Challenges to meet day-to-day business and personal costs, a continued reduction in trade, and worryingly, a growing burden of debt are common. With rising energy, fuel and food prices added to the mix, this will be a tough winter with more self-employed people at risk of falling into debt.

“For many of the small businesses we spoke to, emergency government support, which provided some welcome financial relief at the time, is now an added pressure as repayments are due.

“Government and creditors must continue to support those small businesses facing a sustained impact. This needs to include a fair and affordable approach to recovering Bounce Back Loans and a review of support available for self-employed people on the lowest incomes.

“Following the financial shocks so many have faced in the last year and a half, this ongoing support will be crucial in giving these small businesses the best chance to recover.”