Over two-thirds of small and medium sized manufacturers in the UK report that their order books have halved in the last month, and a similar proportion would run out of money before the end of April without any support, according to a new survey.
Business lender MarketFinance surveyed 860 UK manufacturing businesses which employ between one and 249 staff. Over half said there were interested in accessing funding through the government’s Coronavirus Business Interruption Loan Scheme – which offers up to £5m interest-free for the first year, over six years – to shore up their business.
Around a third of respondents said they were seeking an average of £62,500. Just 4% were seeking a £10,000 loan, while 3% said they needed £300,000.
If firms were unsuccessful in securing a business loan, the majority reported they would turn to invoice finance – finance on outstanding invoice payments owed to them.
With March revenues halved and near-term prospects looking uncertain, 64% of manufacturers have now revised down their order expectations for 2020 by 40-50%, the research found, but many firms are optimistic that the business environment will normalise by the end of the year.
“Manufacturers have been hit hard by the COVID-19 outbreak. They bare in urgent need of support,” said MarketFinance chief executive Anil Stocker. “All the industry indicators show orders are down and unlikely to recover much this year. A number of firms have had to shut their doors and some that remain open are changing to make products that support the national effort to contain the spread of the virus. It’s imperative that we back these businesses.”
The survey also found that 36% of the manufacturers surveyed are turning to their accountants for advice on what to do next. Stocker added: “These accountants have the tools and knowhow to support them in revising their cashflow forecasts, applying for loans and making contingency plans. It’s important for everyone – bank managers, accountants, financial advisors – to come together to support manufacturers. Business advisers will need to bring all their energy, skills and experience to save British manufacturers across the country.”