Two-thirds of small businesses have furloughed staff

One-third of small businesses have furloughed at least 75 per cent of their workforce, according to the British Chambers of Commerce

Two-thirds of small firms in the UK have put a number of their staff on furlough, according to a survey by the British Chambers of Commerce (BCC).

Just over 65 per cent of respondents had furloughed staff in anticipation of the government's Job Retention Scheme going live, with 31 per cent of those surveyed saying they have furloughed between 75 per cent and 100 per cent of their workforce.

HMRC last week confirmed that the scheme would go live from 20 April just before many companies' payroll processes kick in.

The organisation's weekly tracker poll is aimed at businesses with up to 250 businesses, with three-quarters of respondents in the service sector and the remainder in manufacturing.

The BCC poll also revealed that 59 per cent of small businesses had up to three months of cash reserves, with six per cent reporting they have no reserves and the same number reporting cash reserves of up to 12 months.

Two per cent of the poll's respondents said they had successfully accessed the government's coronavirus business interruption loans scheme (CBILS), while nine per cent were unsuccessful. Those who were unsuccessful cited "slow" and "no response from lenders" as the main reason. CBILS has been criticised for the low number of loans being approved.

However, the BCC reported that small businesses were seeing success through other government schemes, with 15 per cent indicating they had successfully accessed grants for small businesses. Twelve per cent revealed they had been unsuccessful in accessing such capital, but the "overwhelming majority" failed because they didn't meet the criteria.

"Businesses on the frontline need cash to start flowing from support schemes fast. With April's payday coming up, we are fast approaching a crunch point, and both the furlough scheme and CBILS facilities need to be accelerated," stated BCC director-general Adam Marshall.

"While we've seen a high number of firms furloughing staff in anticipation of the Job Retention Scheme coming online, it is still unclear whether they will start receiving funds before their payroll date, which could exacerbate the cash crisis many businesses are facing.

"It is essential that the Job Retention Scheme makes payments to businesses as soon as possible. Any delay could mean more livelihoods under threat, more business failures, and more hardship in our communities."

Meanwhile, financial services body UK Finance revealed that its members had lent over £1.1bn via CBILS as of 13 April, up from £453m the week before.

UK Finance said its members had approved 6,020 loans and are continuing to work on the 28,460 applications they have received so far, adding that the average size of loans paid out so far is £185,000.

Mike Cherry, chairman of the Federation of Small Businesses, said that the increase in loan approvals was encouraging but that there is "still a lot of work to do".

"These figures represent an improvement but we need to see much more. If volumes don't improve then all options should be kept on the table, including an upping of the 80 per cent guarantee. Other European nations like Germany have already opted for the 100 per cent point," he stated.

"This improvement marks a starting point, but while one in five formal CBILS applications are approved, the major banks claim their approval rates for standard commercial loans are many times higher than that. These loans are state-backed, so approvals should be higher still.

"Many members tell us it's difficult to get to the formal application stage - banks are still slow to respond to CBILS enquiries. Even if you do get your forms through, the process is very demanding for the uninitiated. We need simplification: banks should look at pre-filling forms based on data they already have on customers, and we shouldn't have behind the scenes reporting requirements holding up approvals."