Survey of Scottish businesses reveals stark findings with almost two-thirds fearing they will go bust due to impact of coronavirus restrictions
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A survey of Scottish businesses has revealed 61 per cent fear they will go bust due to the impact of the coronavirus lockdown despite government financial aid.
The stark results also revealed 93 per cent had been adversely affected by the pandemic, including 64 per cent saying they had been forced to stop trading.
The research was carried out by think tank Scotianomics, of Glasgow, which has called for the Scottish National Investment Bank (SNIB) to back an invoicing scheme to help boost the economy.
More than 400 companies, working across 17 broad sectors, took part in the survey.
A total of 67 per cent admitted they could not survive without some combination of the UK Government’s job retention scheme, which pays 80 per cent of salaries for furloughed staff, and the Scottish Government’s business support fund grants of £10,000 or £25,000.
In total, 71 per cent of respondents said they had not received grant payments.
Of those questioned, 74 per cent anticipated difficulties resuming business activity after lockdown.
Fears regarding the long-term future are believed to have influenced why only a small number of companies have applied for, or intend to apply for, government-backed loans.
While 52 per cent thought the loans were a good idea, only 11 per cent had already applied. A further 11 per cent said they intended to apply.
Gordon MacIntyre-Kemp, director of Scotianomics, said the results made grim reading and called on the Scottish Government to take on board the findings and a list of six strategic recommendations to help shape the best possible chance of economic recovery.
“After extensive analysis of the results, we have suggested a series of innovative and forward-thinking suggestions on how to rebuild Scottish business confidence," he said.
“We are urging the Scottish Government to consider these very seriously.
"If they act on these suggestions, we believe Scottish business and the economy will snap back quicker and more effectively than in many other countries."
One proposal is that the SNIB, under the direction of the Scottish Government, should investigate the opportunity to offer a national invoice factoring service for businesses.
Companies would hand over unpaid invoices to SNIB and be given a loan equal to a percentage of the outstanding amount which would provide struggling businesses the security of working capital and also allow the publicly-owned bank to make a profit by charging a management fee, as well as fees for recovery of outstanding amounts.
"Nothing wrecks business confidence as thoroughly as seeing the payment process shattered throughout the entire supply chain," Mr MacIntyre-Kemp said.
"Without cash flow, businesses simply cannot operate. Without business confidence in the invoice chain, the economy will take an age to recover and investment will stall.
"As a nation, we should be thinking big.
"This kind of progressive move would inject cash into businesses exactly where it is most needed, while telling the world that the Scottish economy is up and running again.
"The fact that it could also build an excellent reputation and safeguard the long-term future of the SNIB would be an added bonus."
Other suggestions include prioritising future help for the worst hit Scottish sectors, including agriculture, forestry and fishing, tourism, arts, entertainment and recreation.
Scotianomics also urged the Scottish Government to buy and stockpile supplies of personal protective equipment, which can be sold to Scottish businesses to help them if there is a second wave of coronavirus, or to help deal with other future infections.
A full copy of the survey can be found at www.scotianomics.org.
Scotianomics hit the headlines last week with its interactive map showing the risk of coronavirus across all of Scotland’s 354 council wards
Related story: New interactive map shows coronavirus risk low across the Highlands.
