More than half (54%) of SMEs believe social distancing has reduced their ability to take on new business, according to research commissioned by Bibby Financial Services Ireland.

Bibby’s Covid-19 Pulse Survey polled 200 Irish SME owners and decision-makers across a range of sectors in early August, with research conducted by Critical Research.

The survey also found that despite the measures introduced under the recent July Stimulus package, one in five Irish SMEs believe it will more than a year before they return to the productivity levels they enjoyed prior to lockdown.

One in four SMEs reported to Bibby that they will be able to cover their business costs for the next three to six months if the current situation continues.

Additional insights gleaned from the survey show that:

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• Almost three-quarters of SMEs are supportive of the government’s efforts during the crisis and two-thirds are optimistic about the future of the economy
• Four in 10 businesses have had to turn down new orders because they are unable to fill them
• Additional obstacles for SMEs attempting to secure new business include being unable to hire or bring back staff (31%) and not having the working capital to buy raw materials (21%).

Among the chief concerns of business owners around the country, cashflow difficulties are an issue for one in three SMEs, followed by a loss of customers (31%) and staff losses (14%).

In response to the pandemic and the restrictions introduced, 35% of SMEs say they had to lay off staff, while 38% closed parts of their business, either temporarily or permanently. Almost one-third of companies said they withheld payment to some suppliers.

The research also surveyed SMEs’ attitudes towards the ongoing trade deal negotiations between the EU and the UK. Six in 10 SMEs are optimistic a trade deal can be done, however almost two-thirds believe there would be a negative impact on their business if a deal cannot be agreed, compounding the effects of Covid-19.

Four in five businesses were not using external finance prior to the Covid-19 pandemic – however two-thirds of those now say they would be more likely to do so in future.

Commenting on the research, Mark O’Rourke (pictured), managing director of Bibby Financial Services Ireland, said that the survey revealed the stark reality facing Ireland’s SME sector.

“While most commend the government’s handling of the Covid-19 crisis, the measures needed to deal with it are having a lasting and profound impact on SMEs.

“Many are dealing with severe cashflow difficulties as a result of supply chain disruption, while the need to ensure social distancing is also causing logistical challenges and making margins tighter.

“Despite this we are glad to see that SMEs are casting the net wider in terms of the financial supports available to them. Many will be reluctant to take on additional debt when already faced with mounting overheads and an uncertain economic landscape, so it’s encouraging to see the growing proportion of businesses contemplating services like invoice finance.”