Foreword
Small business confidence across the UK has collapsed in the face of unprecedented challenges created by the coronavirus crisis. FSB has engaged with government at the highest level to create support for UK small businesses that is as generous as possible, available to as many as possible, and deliverable as soon as possible. The UK Government has responded in kind with a fiscal reform package of enormity.
The Job Retention Scheme and the Self-employment Income Support Scheme will be, for many, the difference between surviving or folding. We welcome the extension of the Job Retention Scheme until the end of June. And as focus turns to recovery, it is important that the rules of the Job Retention Scheme are adjusted to ensure small businesses can stagger the return of furloughed employees given the predicted low levels of economic activity during the next quarter.
In the here and now, there is still much to do to help small businesses survive the crisis. Emergency loans and grants both have an important role to play. It is widely recognised the Coronavirus Business Support Loan Scheme (CBILS) has not reached enough SMEs quickly enough. And whilst we have welcomed government adjustments to the scheme, including the removal of personal guarantees for loans below £250K, the adoption of automated credit score processes for loans below £30K, and the removal of the requirement to first be offered a standard commercial product before a CBILS loan, there is clearly much more to do.
Small business confidence across the UK has collapsed in the face of unprecedented challenges created by the coronavirus crisis.
We want to see the Government guarantee on CBILS loans increase from 80% to 100%. In addition, we need much greater transparency regarding enquiries made about CBILS, particularly around what proportion of these are translating into applications, the application approval rate, and when funding is received by successful applicants.
Cash grants are the most effective mechanism through which to support small businesses at the current time. Therefore, cash grants of £10,000 for small businesses in receipt of small business rates relief/ small business bonus and rural rates relief are a lifeline. The same can be said of the £25,000 grants for eligible small businesses in the leisure, hospitality and retail sectors.
Much of the value of these interventions depends on the speed at which funding is received. Whilst some local authorities have stepped up and delivered, others have not. A razor-like focus on delivery is essential. Many small businesses across the whole of the UK, especially those on or adjacent to the high street, were struggling with business rates well before the coronavirus crisis. A one-year business rates holiday for businesses in the retail, leisure and hospitality sector (and in England – nurseries, estate agents and letting agents) is welcome. However, as forecasts about expected economic activity over the next quarter come in, the Government may need to look at this extending this holiday to a broader range of sectors.
Inevitably, in any wide scale programme of emergency fiscal intervention, there will always be gaps. In these instances, it is important that government looks creatively at how it can flex the rules of existing interventions to better support parts of the small business and self-employed constituency which are not directly helped by major interventions, and which may be ineligible for Universal Credit. This includes those who do not have premises and are ineligible for the Self-employment Income Support Scheme.
Small businesses will be at the forefront of recovery. Resilience and agility run through the DNA of the UK small business community. We have seen case after case of small businesses adapting their models to produce PPE, shift to online sales, and offer deliveries to customers, including the most vulnerable – providing free services and goods to our courageous key workers. Small businesses will adapt. However, just as the crisis has been unprecedented – so will be the size of the challenge faced by smaller businesses and the self-employed during recovery. Continued government support will be essential to ensure that those small businesses saved during the crisis can also survive, and ultimately thrive, during the recovery and, by doing so, help the UK economy to bounce back.
Infographics
Confidence crashes to all time low
Employers plan to reduce headcount
Small business confidence by sector
Exports at an all time low
Firms plan closures amid coronavirus turmoil
Key findings
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