Remember when we thought the biggest thing to happen to the UK’s business landscape in 2020 would be our long-awaited departure from the EU? Yes, that minor event finally happened in January, but soon felt like a distant insignificance as the B-word was all but erased from the media’s vocabulary, replaced by the C-word.

Coronavirus’ impact on small businesses

The coronavirus is everywhere both in the real world and across all media and as it spread faster than an Australian bush fire (was that really also this year?), the effects of the pandemic are felt in virtually every aspect of our lives and communities – from the grim death toll to the economic and social hardships.

You don’t need us to tell you, but as we approach the end of our first month in lockdown, the UK’s labour market has seen disruption the likes of which we haven’t experienced since World War II. Around half the UK workforce is either off sick/in isolation, furloughed or unable to work as their employer has completely shut down with those in the leisure, hospitality and retail industries hardest hit by the Government’s lockdown recommendations.

Even for businesses whose staff are still working, for many productivity has taken a hammering. With many members of the workforce working from home, often with children to not only entertain but somehow educate whilst trying to do the day job (in many cases with poor connectivity) the result is often lost productivity and reduced turnover.

After the initial shocks have subsided, like a beacon of hope we are seeing a number of our clients with increased business and continuing to trade well. Others are executing a perfectly-timed pivot, grasping opportunities where they arise and changing their entire modus operandi to exploit new markets- the UK entrepreneur is very much alive, kicking and irrepressible.

The long term effects are, of course, conjecture at present, with projections ranging from a stark recession to a large bounce back, but we remain confident that the UK SME is more resilient than most and will find a way to prosper once the storm has passed.

A helping hand from the Government

However for many, the only option currently is to turn to the Government for financial support.

It is easy to criticise the politicians hurling brickbats ranging from too much being done to too little too late, or too complicated etc or comparing ourselves with other economies that work on a very different basis to the UK. But, wherever you stand it is clear the treasury is borrowing at previously unimaginable rates to keep the economy afloat and prop up entire industries as well as individuals.

Like us, you were the recipient of a letter the Prime Minister wrote to every household in the country urging people to stay home, promising the Government would be providing financial assistance to help Joe Public make ends meet and put food on the table (providing the supermarkets haven’t sold out of it, that is). The same promises are being made to UK SMEs, but of course, there’s no hiding from the fact that there will be economic casualties from this situation.

To give your business a fighting chance of survival, accessing capital and managing liquidity now are the most important steps your business can take. This also means you do have a fine balancing act to work through, needing to hang onto the money you do have in your business without (where possible) prejudicing others, as well as maximising the influx of cash.

With new policies or amendments seemingly a daily occurrence it is vital you speak to your accountant/professional financial adviser to get the most up-to-date and relevant information for your circumstances but here’s our brief breakdown of the support your small business can currently access to protect yourself and come out of these events fit, healthy and ready for a post-coronavirus world.

Do not accept poor payment practise from larger organisations

If your client is asking you, or trying to force you, to accept extended payments terms, you do not need to accept this practice. If your own negotiations are not bearing fruit then a good port of call is to contact the Small Business Commissioner’s Office to discuss how they can help get your clients to play fair, they also have useful tips and advice on invoicing correctly, how to get paid and seek costs.

Coronavirus Business Interruption Loan

Few business people will not have heard of CBIL’s by now. The scheme assists SMEs who have faced hardship due to COVID-19 by giving them access to finance up to £5 million. Eligibility rests on your annual turnover (sub £45 million) and presentation of a borrowing proposal that your lender would consider viable were it not for the current crisis. The government will guarantee to the Lender 80% of the loan made, and additionally will cover interest payments for the first year and pay the lenders fees, making this borrowing with no upfront costs an attractive option for small businesses.

Initially hard to get, the scheme is starting to gain more traction as the Panel Funders and Brokers gear up to deal with demand. Remember though this is debt, that will need to be repaid and although a director will not now have to guarantee the debt (below £250,000) it is important that you are aware that you, the borrower, will always remain 100% liable for the debt. The CBILS guarantee is to the lender, not you as the SME.

Headlines today state that 50% of these loans are being refused, but the key point is that decisions should be based on whether they would grant the funding in an alternate universe where COVID-19 didn’t exist but all other criteria were the same – there are no certainties now just as before.

Defer VAT payments

UK VAT registered businesses with VAT payments due between 20 March 2020 and 30 June 2020 can opt to delay these payments until 31 July 2021 without accumulating fees or interest on the outstanding amount. Payments after this period will have to be made as normal. You do not need to notify HMRC that you are deferring the payment, it will be dealt with automatically.

Prevent eviction from commercial premises

Just as private residential tenants are offered protection from eviction during the pandemic, protection under the emergency Coronavirus Bill extends to commercial tenants who cannot pay their rent. The government recommends entering discussions with landlords early to negotiate reduced rents, rent holidays or payments plans as necessary.

Reclaim Sick Pay

The Coronavirus Statutory Sick Pay Rebate scheme will allow you to claim back the current rate of SSP for employees who have taken sick leave due to Coronavirus after 13th March 2020. The rebate scheme will cover up to 2 weeks of sickness starting from the first day of sickness and covers employees who are sick, who are self-isolating due to a sick household member, or who have been notified by the NHS that they are extremely vulnerable to severe illness and instructed to shield.

Business Rates Relief

Businesses within the retail, leisure, and hospitality sectors may be eligible for Business Rates Relief. Additionally, Ofsted registered private nurseries can benefit from the scheme, which exempts them from paying business rates for the 2020/21 tax year.

Business grants

The Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund will be executed by local authorities, who will contact eligible businesses to arrange payment. The Small Business Grant Fund will grant all businesses currently in receipt of either Small Business or Rural Rates Relief a one-off payment of £10,000. Retail, hospitality and Leisure businesses in receipt of the Expanded Retail Discount will receive £10-£25,000 depending on rateable value.

Job retention scheme

Another word very few of us had heard of in the UK until recently – furloughing – is part of many vocabularies these days. If you find your business is in the position of not being able to keep all your employees on, rather than be forced to lay workers off or make redundancies you may be able to furlough employees and claim a grant that covers 80% of their salary, up to £2,500 per month. It is then up to you whether you pay the difference or pay only what the job retention scheme pays you. This scheme is in place for 4 months from 1 March 2020 and should enable even the most severely affected businesses to retain their employees until after the restrictions are lifted, and protect the economy by reducing the number of jobless by millions.

Help is available outside of Government sources

Long established funders with a keen understanding of the SME landscape, like ourselves, are still supporting business and advancing money.

We want to assure you that Partnership Invoice Finance’s first priority is to support the health of the economy by providing valuable cash flow management solutions to UK SMEs, as well as ensuring the safety of our valued employees. By financing our clients’ outstanding invoices, valuable cash is kept flowing benefiting not only our clients but others along the supply chain.

We are very much open for business and to ensure your safety and make sure we are doing our bit to stop the spread we are able to offer remote conferencing solutions and signing with clients and new business enquires – we remain able and committed to providing finance, ensuring clients continue trading and even achieve growth during these turbulent times.

It’s safe to say that looking ahead to life beyond COVID-19 is like trying to visualise the road ahead through a pea-soup fog. We don’t know what’s coming next, but we can be certain that as the national and global business community pulls together, sharing knowledge and resources, there will be a way to navigate these difficult conditions, one step at a time.

If there’s any way we can assist, if you or your client(s) are facing cash flow difficulties at this time, please do contact Mark O’Neil .

We hope that you, your workforce, your families and your businesses stay safe.