More than one in two small and medium-sized enterprises (SMEs) have returned to or exceeded pre-pandemic revenue levels, a major study has revealed.

The research, published by Paragon Bank, suggests that the tide has turned in the fight against Covid-19.

According to the report, a third (31 per cent) of small and medium-sized businesses have now returned to pre-pandemic turnover levels, while more than one in five (22 per cent) have exceeded pre-Covid turnover. A further three in 10 businesses predict that they will reach pre-Covid revenue “soon”.

And while not all businesses have fully recovered, nine in 10 (92 per cent) entrepreneurs feel “positive” about the future. This is compared to 86 per cent of business owners who said the same in September last year.

The proportion of businesses who predict that they will remain “as strong” has also increased from 30 to 40 per cent.

Encouragingly, the smallest of businesses – defined as those with fewer than 100 employees – are reporting the “fastest rates of recovery”.

The study indicates that the tide may be turning for businesses, but challenges remain. For example, over half (58 per cent) of small businesses are experiencing “cashflow issues”, 53 per cent report making less profit, and a third (34 per cent) are impacted by late payments.

Commenting on the findings, John Phillipou, managing director of SME Lending at Paragon Bank, said: “It’s encouraging to see that UK SMEs are bouncing back so rapidly post-pandemic, with many already exceeded pre-pandemic turnover levels. We’ve seen many businesses make changes during the pandemic and prove incredibly nimble, from opening up new revenue streams and sales channels to completely transforming their offering.

“Considering that cashflow issues were the biggest challenge of the pandemic for most business owners, it’s understandable that building cash reserves continues to be a priority. On average, business owners that are comfortable with their cash reserves have 30 per cent more in the bank than those who aren’t, so we anticipate that building a financial buffer will continue to be a priority for UK SMEs until the economy stabilises further.”

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