"Taking this measure can have a detrimental effect on the business and also their personal situation, especially if activity does not improve immediately once lockdown measures are eased."
According to research by Nucleus Commercial Finance, one in seven (14%) are using personal savings for immediate financial support despite the options available from alternative lenders.
Only a quarter (25%) of SMEs have avoided taking the option of using personal savings as they already had enough cash in the bank to survive the crisis.
Two fifths (44%) of SMEs said they have been negatively impacted by coronavirus and the subsequent lockdown - they have either applied for or considered seeking additional financial support.
Of this group, 13% have extended an existing loan/finance facility, 12% have already taken out a new loan/finance facility, and 11% are considering applying for a loan/new finance facility.
Chirag Shah, CEO of Nucleus Commercial Finance, said: “As the economic impact of the pandemic becomes clearer, it is alarming that SME owners continue to use personal savings to support their business. While some owners might believe that this is the best option for short-term cash flow needs, taking this measure can have a detrimental effect on the business and also their personal situation, especially if activity does not improve immediately once lockdown measures are eased.
“Entrepreneurs should know and be reassured that there are flexible finance options available; we have already approved more than £100m in funding to SMEs since the coronavirus outbreak, providing both short and long-term facilities to ensure they have the financial support to get through this challenging time.”
