As many as 35% of UK SMEs are concerned about their ability to repay Covid financial support, according to a new survey from EY.
It found 81% of small businesses say they were detrimentally impacted by the pandemic, with 61% having their supply chain compromised.
Meanwhile, just over half (58%) reported a decline in revenue and profit margin, with 57% experiencing a drop in sales due to Covid.
In all, 88% of the 712 SMEs surveyed received some sort of support from financial institutions and or the government, and some 46% now have plans to adjust their business models and go more digital in response to changing markets.
EY’s Anita Kimber said: “Businesses of all sizes have been impacted by the pandemic, but SMEs have disproportionately suffered, with large numbers relying on financial support just to survive.
“While the worst of the health aspect of the pandemic is hopefully now behind us, economic recovery remains a huge challenge, and is being acutely felt by many small firms that are now concerned with how they will repay their debt.”
Banks have lent out almost £80bn in Covid loans guaranteed by the government to 1.56m firms, as well as providing extensions to working capital, overdrafts and capital repayment holidays.