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87% of UK medium sized businesses will struggle to trade with current funding arrangements

03 August 2020

  • UK’s medium-sized companies have borrowed an average of £21 million in COVID-19 loans
  • Evidence of resilience as nearly a third of medium-sized companies report either unaffected or increased revenues despite COVID-19, although costs loom large

Download Rethinking the Economy Survey


More than four-fifths of UK medium sized businesses can only continue trading for up to nine months with current funding arrangements, according to new research from accountancy and business advisory firm, BDO.

BDO’s second Re-thinking the Economy survey of 500 medium-sized businesses across the UK reveals that medium-sized businesses have each taken an average of £21 million in loans as a direct result of COVID-19. While most companies plan to repay the debt, 10% do not expect to be able to pay the full amount back.

The research also sheds light on the scale of redundancies across the mid-market. 91% of mid-sized businesses have made staff redundant due to COVID-19. While most businesses have made a small number of cuts, just under a third have already made around a fifth of their workforce redundant, despite the Government’s Job Retention Scheme running until the end of October.

However, the findings also point to some early signs of recovery and resilience within the mid-market. A third of businesses (33%) were either unaffected or increased revenue in recent months and over a quarter (26%) had launched new products or services. 73% of medium-sized businesses said they intended to take on more apprentices after the Government’s bonus announcement.

There was also clear support for the Government’s furlough bonus scheme, with two-thirds (67%) of businesses saying they were now planning on either bringing back all staff or a larger group of staff than originally intended as a result of the bonus.

While it may be a long road ahead, a recovery is expected. Over half (65%) of respondents predict it would take the economy between one to three years to recover from the impact of COVID-19.

Paul Eagland, Managing Partner at BDO, said: “History tells us that the level of resilience of the mid-market will be key to economic recovery. This data shows us that, while challenges remain, businesses have acted decisively to protect themselves and weather the storm. Some businesses have taken on large amounts of debt to survive the crisis, which prefaces a long road to recovery.

“But at the same time, some companies will use this as a moment to rethink their operations and business models. Thankfully, the entrepreneurial spirit of the UK’s ambitious mid-sized businesses has not been completely dampened, with many launching new products or services during lockdown and others aim to create the next generation of workers using the new apprenticeship funding.”

Case study: Brompton Bikes shows resilience through pandemic and looks ahead to London’s ‘Amsterdam moment’

Brompton Bikes’ experience during COVID-19 reflects its ability to adapt to and manage the crisis. The company has a large supply chain and exports to over 46 countries, so felt the impact of COVID-19 as early as January. The company secured a Government-backed loan and overdraft facility as a precaution. Some staff were placed on furlough to further protect cash flow during the pandemic, although the company has now been able to return almost all its staff from furlough.

“For cycling, the virus outbreak could ultimately lead to a place like London having its Amsterdam moment.” Lorne Vary, CFO of Brompton Bikes

Once the company had financially prepared for the crisis, the management team looked at how they could adapt to become part of the solution by launching Wheels for Heroes, which allowed NHS workers to borrow bikes for free so they could travel to work safely. The company also looked forward and committed significant capital into its factory so social distancing could be observed. Ahead of a likely squeeze on income and discretionary spend, it also launched a B75 model with a financing element, allowing buyers to repay the cost for a fee similar to the cost of their monthly commute (£30). 

Commenting on the past four months, Lorne Vary, CFO of Brompton Bikes, said: “COVID-19 has presented a huge challenge for the business, but we’ve been focused from the very start on how best we can come through this. In our industry, it could prompt significant change. For cycling, the virus outbreak could ultimately lead to a place like London having its Amsterdam moment. People and governments are ready to embrace a new way of getting around.

“Different parts of the company were affected in different ways, and so we had to be flexible in our approach. We looked at parts of the company where we could reduce spending, such as head office, and did so. The furloughing scheme was a life saver. In other areas, like our factory, we invested more so workers could continue working safely.

“As a business we were very lucky to be given key worker status and ultimately were able to bring most of our staff back off furlough. Once the financial uncertainty had passed, we were able to adapt and rebuild our model around a new reality.


Read the latest key themes from the Rethinking the Economy survey

Note to editors

Medium-sized businesses are defined as businesses with revenue between £50-£350m. This survey was conducted by Censuswide on behalf of BDO LLP in July 2020.

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy. 

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed. 


BDO LLP operates in 17 locations across the UK, employing nearly 5,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

BDO’s global network

The BDO global network provides business advisory services in 167 countries, with 88,000 people working out of 1,800 offices worldwide. It has revenues of $9.6bn.


Tom James / Francesca Bliss
Headland Consultancy on behalf of BDO LLP
[email protected]
+44 (0)78 1859 4991

BDO press office:
020 7893 3000
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