Almost a third of business owners surveyed doubt they will be able to continue trading in 2021

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Survey conducted by KSA Group on their website found that many business owners are worried about being able to to trade at all in 2021 and over a third a worried about paying back their government loans

Perhaps more worrying is the fact that nearly a third (28%) feel that they may not be able to trade at all. It is hoped that pent up demand will see a boom for business for some, when lockdowns are lifted.

Insolvency Practitioners KSA Group Ltd, through their website, have conducted a survey of their visitors since the beginning of 2021. The survey asked 5 basic questions.

In 2021, as a business owner, what worries you most?
1.    Repaying Bounce Back or CBILS Loans
2.    Paying HMRC Liabilities
3.    Paying Your Business Rates/Rents
4.    Paying Staff
5.    Being able to trade at all.

KSA received 220 responses over the last 45 days. The results of the survey are as follows:

What worries you most?    

Repaying my Bounce Back or CBILS Loans?    38%
Paying my HMRC Liabilities?    22%
Paying my Business Rates/Rents?    7%
Paying my Staff?    5%
Being able to trade at all?    28%

Insolvency Practitioner Eric Walls, Director of Insolvency at KSA Group, said that these results are not too surprising given the current situation. In relation to the relatively small percentage of respondents concerned about paying their staff and landlords Eric commented “The worry over paying staff is reduced somewhat when businesses can put them on furlough, and the government will pay the cost. In the same vein, when landlords struggle to take any meaningful action to recover rent, this also reduces the pressure on business owners and directors”.

The ban on winding up petitions and enforcement by landlords has meant that many landlords have received very little rent. In documents made public recently, it was shown that Edinburgh Woollen Mill and Peacocks Stores had not paid any rent to their landlords since March 2020. Many businesses feel that the landlords will have no choice but to forego rent. Other businesses have paid their landlords ahead of other debts, worried that if they are evicted then they simply will not be able to recover from COVID-19.

Over a third of respondents are worried about repaying loans. This is not surprising, as many loans were taken on at the beginning of the pandemic when most people believed that the pandemic would be over by now, or at least that further lockdowns would be avoided. The government is certainly worried about the ability of these companies to repay the loans, and it has been announced recently that the repayment period may be extended to 10 years, and that there will be a “pay as you grow” scheme. Even so, if you have taken a loan of £50,000 then even over 10 years your repayments will be close to £500 per month.

Being able to pay taxes is always a worry for many businesses but HMRC has not been exerting much pressure on businesses to pay tax due to Covid. As such, pressure from HMRC has not been a feature in many of the recent conversations that we have had with directors of companies.

Perhaps more worrying is the fact that nearly a third (28%) feel that they may not be able to trade at all. It is hoped that pent up demand will see a boom for business for some, when lockdowns are lifted, but the shift to online shopping, ban on travel and large indoor events/exhibitions means that many businesses will not be able to trade, as before, for at least 2021 or beyond.
In summary, it is easy to see that many businesses and companies seem simply to be marking time to see what happens over the coming months. There is no doubt that furloughing staff and taking “rescue loans” has allowed many companies to survive. However:

  • At this stage, it is planned that furlough will not last past April 2021.
  • Loans need to be repaid at some point.
  • VAT bills deferred in the quarter to June 2020 need to be repaid starting in April 2021, even if you can defer those payments over a period of months.
  • Landlords will want their rent and will, in the not too distant future, be able to take recovery action to get it

All of the above, coupled with the uncertainty over future trading and future markets, is clearly reflected in the results of our survey. For whatever reason, most directors see a worrying and difficult time ahead, and many feel that they will need help to allow them to navigate these tricky waters. Contacting specialist turnaround and insolvency practitioners is a good step to take now, not when the critical issues above turn into reality.

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Robert Moore
KSA Group
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