One in three smaller firms (SMEs) and 43% of medium sized enterprises do not expect to be in business beyond a year, according to a new report.
The research by law firm Fladgate said its survey of 500 SMEs paints a “concerning outlook” for the backbone of the UK economy.
Fladgate’s Restart Capital report also reveals that one in five SME’s said their business is already in “distress.”
Meanwhile, 31% of respondents said they are still in a “shock and denial phase” or “anger and depression,” which may be hampering their ability to decide how best to move forward.
The survey highlights says that 72% of SME leaders are trying to raise money to ride out the storm, while 46% said they did not succeeded as hoped.
It also found that private investors are willing to deploy capital to support SMEs, with nine in 10 investors or 90% recognising SMEs are the key to the UK economy.
In terms of investment, 85% of investors want to play an active role in their investments, they said they see the highest potential in supporting troubled businesses, with over 50% admitting they had experience of working with distressed firms.
Investors are most interested in allocating capital to sectors hardest hit by COVID-19, the report said.
Construction, which SME leadership teams revealed had experienced a 39% hit to turnover is seen as the most attractive sector for investment, with 29% of investors keen to invest in this market.
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As government support for businesses in the wake of COVID-19 is unwound, the majority of SMEs and investors seek more government support to