Small businesses are looking for a helping hand - and soon

This is as challenging a time for the companies in the entertainment and hospitality industry as any of us can remember.


A helping hand is needed for UK’s small businesses – quickly

wine business

 

 

 

 

 

 

People weren’t told to avoid eating out in the global financial crisis of 2008 and while theatres and cinemas remained open during the blitz, it wasn’t something you could catch from the person sitting next to you.

 

One option considered by some restaurants is to adapt by offering a takeaway/delivery service for a slight discount. Use social media to make customers aware of this service and customers are likely to welcome a change from bulk bought pasta and rice. Small bakeries are also offering a buy frozen, bake at home option which appears to be so popular it is selling out also immediately. Anything that can give consumers a “taste” of treating themselves or eating out is likely to sell well.

 

The current* UK government advice and policy is not to close restaurants and pubs that are naturally confined spaces but they are advising people to actively avoid them.

 

Mark Jones, CEO of Carluccios spoke for the majority of venues when he said that this advice means that his and other restaurant chains will be days away from large-scale closures without official intervention and support. 

 

He said: “We understand the role we have to play in public health, so I won’t question the government’s advice on that but to do that to an industry without any fiscal support whatsoever condemns us to death, effectively.”

 

He was joined by Emma McClarkin, Chief Executive of the British Beer and Pub Association who wrote to the Prime Minister saying: “The severity of the COVID-19 crisis is now impacting on pubs with devastating effect. The very existence of thousands of pubs and a lot more jobs is now at risk. 

 

“The government needs to give clear instructions and detail on the support package to rescue the sector and hundreds of thousands of jobs. 

 

“Urgent measures to support cash flows and enable cost reductions is an absolute necessity. Government action now will save thousands of jobs and save our pubs. Support for pubs now is an investment in the long-term future of communities across the UK. Without it we risk losing our community assets forever.”

 

The Association of British Insurers have also sought to clarify the situation for businesses in the event they are forced to close and the news might not be encouraging. 

 

They said: “Irrespective of whether or not the Government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the Coronavirus. 

 

“Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.

 

“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease. In this instance, an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker to see if they are covered.

 

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So what steps can you take now to protect your business right now?

 

In both last week’s budget and an emergency statement made last night, the Chancellor Rishi Sunak announced some measures that could help SMEs specifically. 

 

  • HMRC Time to Pay tax suspension

 

Businesses that are struggling to pay their tax bills can ask HMRC for an agreement called Time to Pay which would suspend debt collection and allow them to negotiate on an individual basis depending on their circumstances. The usual 3.5% annual interest on deferred tax payments will also be waived. 

 

  • Business rate relief

 

There will be no business rates charged on companies in the retail, leisure and hospitality sectors in the financial year 2020-21. This includes hotels, restaurants and coffee shops. Additionally, there will be a £5,000 business rates discount for pubs with a rateable value of £100,000 in England. 

 

These are effectively 45% of all business premises in the country or 900,000 that will be rate free for a year. 

 

  • Enterprise grants

 

Initially the 700,000 smallest businesses who are already exempt from paying business rates will be eligible for an additional £10,000 grant to help meet business costs, up from £3,000. This has also been extended to up to £25,000 for medium sized businesses in the sector too if they have a rateable value of £51,000 or less. 

 

  • Riskier loans underwritten

 

The Coronavirus Business Interruption Scheme is replacing the Enterprise Finance Guarantee Scheme (EFG) via the British Business Bank and will allow the government to guarantee debt and encourage loans to be given to companies that would otherwise be deemed as too risky.

 

Yesterday the Chancellor announced a package of up to £330 billion of state-backed loans to businesses. 

 

Under the scheme the BBB will provide lenders with a guarantee of 80% of each loan. The government will waive the 2% annual charge on borrowers for the guarantee under the previous EFG and will support loans of up to £5 million increased from £1.2 million.  

 

The BBB has already said that companies affected by the coronavirus will be eligible to apply for funds under the scheme. 

 

  • Reclaim sick pay costs

 

SMEs will be able to reclaim the costs of 14 days of sick pay – just under £200 – per employee. This reimbursement may take longer as the repayment mechanism hasn’t been set up yet. 

 

  • Mortgage holiday

 

One of the newer announcements was that businesses in distress because of COVID-19 would be able to apply for a three-month mortgage holiday from their lenders.  More details are to be forthcoming on the protocol and credit effects in the coming days. 

 

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There will be other announcements made and other methods of help made available in the coming days or weeks that we’ll write about when we hear what they are. 

 

In the meantime, if you’re worried about your business and its viability get in touch with us

 

We can arrange a convenient, remote, free initial consultation with one of our expert advisors to listen to your situation and help you identify what the key issues are that have to be dealt with first.  

 

We’ll then work with you to produce a plan that will hopefully be the difference between keeping your company going or not for the rest of this year and beyond. 

 

*as at 8am 18/3/20

 

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