SMEs expect recovery by summer 2022: small businesses facing crunch year as vaccine rolled out

  • 1 in 12 small businesses do not believe they will survive the pandemic
  • SMEs do not expect to fully recover to pre-pandemic levels until summer 2022
  • 3 in 10 businesses to permanently leave the high street 
  • Santander UK has lent more than £4bn of lending to small businesses through the Government backed Bounce Back Loan scheme

Small and medium sized businesses that have suffered due to COVID-19 don’t expect to recover to pre-pandemic levels until summer 2022, according to new research1 published by Santander UK.

With the UK now well into a vaccination programme that many hope will enable the economy to start reopening, ongoing cashflow issues and a decline in consumer demand means that one-in-twelve (8%) small businesses do not expect to survive the pandemic. 21% of UK SMEs say they are ‘not sure’ if they will survive long enough to take advantage of any change in the current restrictions. 

The data reveals that COVID-19 is likely to widen regional disparity, with London firms forecasting a decrease of 3.8% in profits by March 2021, compared to before the pandemic. Comparing this to the East Midlands (-11.6%), West Midlands (-9.3%), Yorkshire and the Humber (-8.0%) and the North West (-7.1%), it is clear that tailored, regional support will be vital in helping these important business hubs recover. 

Unsurprisingly, mental health issues are a growing concern for small business owners. Two-fifths (39%) of women running small businesses reported a decline in their mental health since the COVID-19 outbreak, compared to 26% of their male counterparts. Women were also less likely to seek support when it came to maintaining mental wellbeing, with 41% stating they would not ask for help – 5% more than that of male business owners (36%).

Susan Davies, Head of Business Banking, Santander UK, commented: “Small businesses have proven their resilience so far, and their hunger to survive and thrive is palpable. With the growth of remote working, small businesses across the country will be at the forefront of our economic revival, but 2021 will be a crunch year for many, with a lot riding on a successful vaccine rollout. 

“While there is no ‘silver bullet’ solution, extensions to VAT deferrals, the furlough scheme and business rates relief could provide businesses with additional breathing space. We have been working tirelessly to support small business owners throughout the pandemic - from online workshops, ecommerce training and mental health support – and we will continue to help them find solutions to the huge challenges they are currently facing.” 

Just two-in-five (42%) small businesses report that they have not had to halt any part of their operations since the outbreak of the pandemic, with respondents seeing their profits slump by 16.5% on average. 

SMEs run by people from ethnic minority backgrounds experienced the most significant decline in business activity, with almost half (47%) seeing a dip since the COVID-19 outbreak. According to the data, 67% of businesses run by ethnic minorities were operating ‘well’ at the start of last year, compared to just 20% when the pandemic hit. The difference (33%) was less extreme in non-ethnic minority run businesses, where respondents experienced a decline in performance from 58% to 25%.

One-in-five (18%) SMEs have started or increased sales through online platforms as a result of the COVID-19 pandemic, however 63% stated that selling their product or services online or through social media was not an option. The disparity makes clear that there are a significant number of businesses that are simply unable to generate revenue, reiterating the importance of additional support through Government lending schemes and tax reliefs. 

There is doubt cast on the future of the high street, as 29% of small businesses are set to leave city centre hubs this year. Almost one-in-five (18%) SMEs that are currently located on the high street say they plan to relocate, while a further 11% think it is looking likely that they will have to permanently close their business.

In addition to the £4 billion of financial support provided through the Government-backed Bounce Back Loans (BBLS) to SMEs since the scheme launch, Santander UK has harnessed its business insight and sector experts in order to provide vital non-financial support across the UK. Santander’s business support programme ‘Survive and Revive’ includes initiatives such as webinars and mentoring, free advertising on Santander Marketplace2 and toolkits all of which have helped businesses to survive the COVID-19 pandemic. A full list of the initiatives can be found below: 

  • Mental Health support: As well as providing SMEs with helpful tips and guidance on maintaining mental wellbeing, we have partnered with Thrive, an NHS-approved tool, to help prevent and manage stress, anxiety and related conditions. We are also partnering with MIND, the mental health charity, to enhance customer-facing colleagues’ knowledge and awareness of mental health, including how best to respond to and support our customers.
  • Business Mentoring: Running a business is no small feat, and we believe that learning from successful business owners and entrepreneurs is the best way to help SME owners avoid pitfalls. That’s why we successfully paired 200 mentor/mentee relationships in 2020 and will continue this programme into 2021 and beyond. The Women Business Leaders' Mentoring Programme is open for applications now.
  • Webinars: We have partnered with sector specialists and trade bodies to provide unique insight into a range of issues across different sectors. With topics ranging from ‘Supply Chain Resilience’ to ‘Managing Margins During Volatility’ and ‘Innovating for Growth’ our webinars get to the crux of many issues facing small businesses during the pandemic. 
  • Elavon: We’ve teamed up with Elavon to offer a range of card acceptance services to help businesses to adapt to changing trading environments. Elavon is also offering eShop enabling businesses to build their own website, with the functionality to trade online and promote their business too. 
  • Local relationship teams: Our business relationship teams span the UK and support SMEs in myriad ways – from offering advice on managing cashflow and repayment holidays, to supporting businesses to find local support through our network of relationships with local enterprise partners.  
  • Santander Marketplace: As part of our business support programme, we launched Marketplace, which offers free advertising for UK businesses to help them and the wider UK economy to get back on their feet. 

For more information about Santander’s Survive and Revive programme, visit our website.

- Ends -

The information contained in our press releases is intended solely for journalists and should not be used by consumers to make financial decisions.

Notes to Editors 

  1. Research is drawn from a survey conducted by Opinium research between the 14 to 24 December 2020. The base size was 1,748 UK adults who are senior managers and those above who are responsible for decision making in Small and Medium-sized Enterprises. 
  2. As part of our business support programme Survive and Revive, Santander UK has launched Marketplace - offering free advertising for UK businesses, helping them and the wider UK economy to get back on their feet as lockdown eases.

Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. At 30 June 2020, the bank had around 23,000 employees and serves around 14 million active customers, via a nationwide branch network, telephone, mobile and online banking. Santander UK is subject to the full supervision of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in the UK. Santander UK plc customers’ eligible deposits are protected by the Financial Services Compensation Scheme (FSCS) in the UK. 

Banco Santander (SAN SM, STD US, BNC LN) is a leading retail and commercial bank, founded in 1857 and headquartered in Spain. It has a meaningful presence in 10 core markets in Europe and the Americas, and is one of the largest banks in the world by market capitalization. Its purpose is to help people and businesses prosper in a simple, personal and fair way. Santander is building a more responsible bank and has made a number of commitments to support this objective, including raising over €120 billion in green financing between 2019 and 2025, as well as financially empowering more than 10 million people over the same period. At the end of the first half of 2020, Banco Santander had more than a trillion euros in total funds, 146 million customers, of which 21.5 million are loyal and 40 million are digital, 11,800 branches and 194,000 employees. 

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