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SMEs Navigate Supply Chain Challenges: Over a Third Extend Machinery Asset Usage, Reveals Paragon Bank Research

by Anna

Recent research by Paragon Bank, surveying over 500 SMEs in the UK, has uncovered the significant impact of supply chain issues on business operations, with more than a third of SMEs extending the usage of machinery assets beyond their initial plans. The survey, conducted by Opinium, provides insights into the challenges faced by SMEs in various sectors due to supply chain disruptions.

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Key Findings:

Extended Asset Usage: Over 36% of SMEs reported operating a machinery asset for a longer duration than initially planned, directly attributing the extension to supply chain issues that impacted the availability of new variants.

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Commercial Vehicles: A quarter (26%) of the surveyed SMEs revealed that they are running commercial vehicles for a longer period than originally anticipated, indicating the widespread impact on mobility-related assets.

Refinancing Existing Assets: Nearly a third (31%) of SMEs opted to refinance existing machinery assets to cope with the challenges posed by supply chain disruptions.

Pre-owned Asset Acquisition: Due to the scarcity of new options, 38% of SMEs acquired pre-owned assets, showcasing a pragmatic approach to address the shortage of available machinery.

Sector Variances: Manufacturers were more likely to operate existing assets for an extended period, with 41% of firms in this sector experiencing such delays. The transport and logistics (36%), agriculture (34%), and construction (31%) sectors also faced similar challenges.

Future Strategies:

New Investment Plans: Despite current challenges, 39% of SMEs are planning to acquire new machinery assets in the next six months, highlighting a forward-looking approach.

Consideration for Investment: An additional 36% of SMEs are considering investing in new machinery assets, demonstrating a positive outlook despite prevailing uncertainties.

Diversified Investments: Over a third (35%) of businesses are planning to invest in other equipment, while 28% aim to acquire new Heavy Goods Vehicles (HGVs) and 20% Light Commercial Vehicles (LCVs).

Budget Allocations: Among businesses planning to invest in new machinery assets, 41% anticipate spending between £200,000 and £500,000, with 18% planning to spend between £100,000 and £200,000.

Stewart Good’s Perspective:

Stewart Good, SME Lending Sales Director at Paragon Bank, acknowledged the ongoing challenges stemming from the pandemic’s aftermath and supply chain disruptions. He highlighted that while supply chains are gradually normalizing, SMEs are increasingly focused on replacing aging assets and leveraging refinancing to release cash. The research underscores the resilience and adaptability of SMEs as they navigate uncertainties and plan for future investments.

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