Half of SMEs changing business savings habits due to Covid-19 impact
New research from Aldermore bank reveals the Covid-19 pandemic has caused half (51%) of SME decision makers to change their business savings habits. This change in habit was more evident among larger sized SMEs with three quarters (77%) of SMEs with 50 to 99 employees citing a change in savings habits, compared to two in five (43%) of SMEs with 1-2 employees.
Ewan Edwards, director of savings at Aldermore, said: “Although the economy has started to open up, the Covid-19 pandemic continues to have a profound impact on the SME community. At the start of the pandemic, many businesses were caught out by the financial impact of lockdown and are now realising just how useful business savings can be as a buffer against the current uncertain situation.
“It’s encouraging to see that SMEs are becoming more aware of what they need for them to thrive and survive and are adjusting their business savings habits as a result. Businesses, particularly in some of the worst impacted sectors, should consider business savings accounts to add security and provide a financial buffer against any future shocks.”
Pandemic impact affecting the ability to turn motivation into action
While SME decision makers are more motivated to prioritise business savings, the immediate financial pressures from the pandemic is causing challenges in putting that into practice. One in five (21%) SMEs said they would be immediately increasing the amount being put away in their business savings account, while the same proportion (20%) are committing to putting the same amount away, but one in twelve (7%) SMEs said it’s likely they are only able to put less away going forward.
The Covid-19 pandemic has also motivated many SMEs to become savers, where previously they had not been, with one in 10 (11%) opening a savings account due to the impact lockdown and social distancing guidelines have had on their business. This sentiment was particularly strong in the agricultural industry with two in five (38%) committing to opening a business savings account in the future, the highest of any sector.
Industries greatly impacted by Covid-19 are most motivated to save more
Different sectors have differing levels of enthusiasm towards business savings moving forwards, with those industries greatly impacted by lockdown and social distancing guidelines being most likely to focus on creating a financial buffer in the future. Over one third (35%) of SMEs in the food and drink sector say they are increasing the amount put into business savings going forward, the highest of any sector, followed by a third (33%) in legal services, 30% in manufacturing and 28% in real estate.
47% of SME owners working in business services and healthcare stated they would prioritise business savings more in the future, the highest percentage of any sector
35% of SME owners working in Food & Drink state they will immediately increase the amount put in business savings, the highest percentage of any sector
