The latest Covid-19 Pulse survey from business funder, Bibby Financial Services (BFS), has found that lockdown restriction easing plans are boosting confidence in SMEs.

75% of business owners share a positive outlook and 74% believe that demand will be back to pre-pandemic levels by Christmas.

SMEs across the country have begun outlining their plans to return to a more open economy with 59% seeing the acquisition of new customers as the main reason to be optimistic.

The average SME intends to invest £150,000 in the coming months, with those in the construction (£225,000) and transport (£209,000) sectors planning to invest even more.

61% are planning to dedicate a portion of investment to staff training and development (39%) or new hires (29%). BFs says this means that nearly a third of the UK’s 6 million SMEs are planning on increasing their workforce, a powerful boost for the nation’s economy.

Jonathan Andrew, global CEO of BFS, said: “The UK’s SMEs have had an incredibly difficult year, and it’s fantastic to see that the vast majority are optimistic for the year ahead. It’s hard to predict what the long-term impact of the pandemic on the UK economy will be and it’s unlikely that it will become clear for some time yet. However, as demand begins to return to normal and SMEs look to meet it, cashflow is going to be key.”

Despite the optimism, SMEs are owed an average of £116,376. This sum is significant and represents a huge working capital gap, with more than a quarter of SMEs (26%) saying they need cashflow support more than ever. Furthermore, SMEs who have suffered from bad debt during the pandemic are twice as likely to say their business is still in survival mode (32% compared to 14% on average).

In addition, the government-backed loans that were a lifeline for so many of the UK’s SMEs will need to be repaid. According to estimates from the National Audit Office (NAO), the Department for Business, Energy and Industrial Strategy (BEIS) and the British Business Bank (BBB), between 35-60% of borrowers may default. BFS’s findings show that while 55% of SMEs plan to repay these loans via company profit, almost two-fifths (39%) haven’t yet considered or don’t know how they will repay these loans.

Andrew added: “The support provided by the government during the pandemic saved thousands of businesses, but as economic activity begins to pick up, SMEs need to start considering more sustainable forms of funding. Invoice Finance is exactly that. It unlocks the capital locked up in unpaid invoices, and it scales with a business as it grows.

“We’ve been supporting SMEs from across the UK for over 40 years and recently launched our Pandemic Recovery Fund. The fund has opened up £300m of funding to support SMEs as lockdown restrictions are lifted. We know that SMEs will power the recovery, and we’ll do our part to help power them.”