One in five businesses forced to take out a government-backed loan during the pandemic say they don't expect to be able to repay the money.

And a third of owner-managed firms say cash reserves took a beating during the health crisis.

The findings come in a new nationwide survey conducted by Canterbury, Chatham and Sandwich business consultants and accounts, Kreston Reeves.

Its Shaping Your Future report polled 652 business owners last month.

It also revealed 52% of firms are experiencing supply chain delays of up to six months, with a third (32%) looking to reduce output as a consequence.

Of those experiencing delays, 62% expect profitability to fall by up to 10% and 29% expect it to fall by up to 25%.

However, despite the gloom, 39% of all the firms polled, expect to see turnover increase by up to 25% in the next 12 months - and 27% up to 50%. While 87% said they were confident for their futures.

Andrew Griggs, senior partner at Kreston Reeves, said: “UK business owners are enormously confident for their futures despite the business environment remaining so uncertain. For many businesses coming out of the Covid pandemic is proving harder than going into those first lockdowns. Businesses must continue to look and plan ahead and shape their future.”

The research points to some worrying challenges for UK owner-managed businesses. Over a third (36%) of businesses report lower cash reserves now than when entering the pandemic in March 2020, while a fifth of businesses do not believe they will be able to repay government backed Covid lending.

Last month, the Bank of England warned many firms faced being tipped over the edge by repayments on the lending.

Andrew Griggs added: “As the economy picks up, businesses with lower cash reserves or unserviceable debt may struggle to take advantage and rebuild that business in these changing times. They should speak to their advisers and lenders now and certainly before any crunch comes. Early transparent discussions, pointing to what the future might look like when the business recovers are likely to be more fruitful than an eleventh-hour conversation.

“The same applies to those businesses that expect reduced profitability following supply chain challenges. Businesses are having to hold more stock, incurring greater costs alongside restricted cash flow. If they can see pinch points ahead, they too should seek the support before trouble hits.”

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