Coronavirus pandemic holds 33,400 SMEs in distress across Yorkshire

THE latest Business Distress Index from Real Business Rescue revealed 33,400 SMEs in significant distress across Yorkshire, reflecting a 7% increase since the last quarter.

Real Business Rescue, part of Begbies Traynor Group, analysed Red Flag Alert data which showed 42,000 more SMEs to have plummeted into distress across the country since the first lockdown, taking the overall figure to 544,000. SMEs in significant financial distress are responsible for employing 1.8 million people, directly impacting unemployment rates.

In addition to this, the number of start-up businesses (born after 2017) in significant distress soared by 18% in the last quarter due to the pandemic. There are now 108,000 young businesses in distress – a 39% increase since the start of lockdown when there were 78,000 businesses in distress.

 Of the 544,000 SMEs in distress, the Real Business Rescue analysis reveals the industrial transportation and logistics sector (covering transport of all goods across air, land and sea) saw the biggest increase in troubled companies with a 14% leap to 13,528 at the end of Q3 2020, of which 1,250 of businesses were based in Yorkshire. The bar and restaurant sector were close behind with a 9% increase from 1,407 in Q2 2020 to 1,536 in Q3 2020 in Yorkshire.

Andrew Mackenzie, Partner at Real Business Rescue in Hull, said:

"Our latest results demonstrate that while some bigger companies are withstanding the pressures of the pandemic, it is the smaller companies that are experiencing the hardest blow. With the pandemic having pushed more than 40,000 into financial distress, the backbone of the UK’s economy is suffering, and we could soon have a dangerously top-heavy economy.

“The role of these smaller companies is key, not only as key suppliers with a vast array of important innovations, but as employers to millions of talented people across Hull and the wide Yorkshire and the Humber region.

“It is for this reason that small businesses with depleted cash reserves need to get ahead of the game by considering restructuring action now so that when the creditors come calling - they are in a good space.”