The number of IT SMEs in the UK that are in “significant financial distress” as a direct consequence of Covid-19 has risen by 15 percent in the first quarter of 2021. In total, 47,000 IT businesses are said to be in crisis, putting 185,000 jobs at risk.
This is according to anaylsis from RealBusinessRescue, a service for business leaders under financial pressure. In the report, businesses classified as under “significant distress” are said to have minor CCJs (up to $7,000) filed against them. Companies identified by Red Flag Alert as having sustained or marked deterioration in key financial ratios and indicators (working capital, contingent liabilities, retained profits, net worth) also fall into this category.
Analyzing Red Flag Alert data, the organization found that 713,000 UK SMEs are in distress across various sectors.
The number of IT start-ups born after 2017 in significant distress rose by 37 percent in the last quarter, as a direct consequence of the pandemic. There are now 9,289 of these businesses, up from 6,779 at the end of 2020.
“We need the smaller IT, construction, office supplies, restaurant, bar and hotel chains to be open and face-to-face services to be functioning in order to survive,” said Shaun Barton, National Online Business Operations Director at RealBusinessRescue.
“That is why these smaller-sized firms – that may have spotted an opportunity before the pandemic – are struggling. The sector needs to stand firm in the hope that the unlocking roadmap begins to have a positive impact.”
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