CONFIDENCE has been so badly damaged by the Covid-19 lockdown that 61% of Scottish businesses fear they will go bust, despite Government support.

A survey of more than 400 companies across 17 sectors found that 93% had been affected by the pandemic, including 64% who said they had been forced to cease trading.

Two thirds (67%) admitted they could not survive without some combination of support from the Government’s Job Retention Scheme – which pays 80% of salaries for staff on furlough – and Holyrood’s Business Support Fund grants of £10,000 or £25,000. A total of 71% of respondents said they had not received grant payments.

The research was carried out by independent think tank Scotianomics, which last week released its interactive map showing the risk of contracting Covid-19 across Scotland’s 354 council wards.

Its 21-question survey addressed the impact of lockdown restrictions to date and highlighted how confident businesses are about resuming trading once they are lifted.

Despite the financial aid and stimulus available, 61% of firms said they feared they would not survive the crisis, and three-quarters (74%) said they anticipated difficulties resuming business activity after lockdown.

Long-term fears are thought to have influenced why so few companies have applied, or intend to apply, for Government-backed loans.

While more than half (52%) thought they were a good idea, only 11% had applied and a further 11% said they intended to apply.

Scotianomics director, Gordon MacIntyre-Kemp, said the results made grim reading and called on the Scottish Government to take on board the findings and a list of six strategic recommendations to help shape the best chance of economic recovery.

“After extensive analysis of the results, we have suggested a series of innovative and forward-thinking suggestions on how to rebuild Scottish business confidence,” he said.

“We are urging the Scottish Government to consider these very seriously. If they act on these suggestions, we believe Scottish business and the economy will snap back quicker and more effectively than in many other countries.”

Scotianomics has suggested an invoice factoring service for firms through the Scottish National Investment Bank (SNIB) under which they would be given a loan against unpaid invoices to help them with cash flow to cover delayed payments.

This would provide struggling firms with the security of working capital, and allow the publicly-owned bank to make a profit by charging a management fee, as well as fees for recovery of outstanding amounts.

MacIntyre-Kemp added: “Nothing wrecks business confidence as thoroughly as seeing the payment process shattered throughout the entire supply chain. Without cash flow, businesses simply cannot operate. Without business confidence in the invoice chain, the economy will take an age to recover and investment will stall. As a nation, we should be thinking big. This kind of progressive move would inject cash into businesses exactly where it is most needed, while telling the world that the Scottish economy is up and running again. The fact that it could also build an excellent reputation and safeguard the long-term future of the SNIB would be an added bonus.”