What support is there for struggling business owners?

8th February 2021

With a third lockdown and reports that social distancing restrictions could last for many more months, many business owners will be worried about the impact on their operations. Covid-19 has affected lives for longer than expected when the pandemic first became widely known and even business owners initially confident in their ability to survive may now have concerns.

According to the Federation for Small Business Index, 5% of firms expect to close this year. The figure is at its highest level since the index began ten years ago. Many more businesses are hoping to survive, but are having to reduce staff or scale back plans. One in five firms reduced headcounts in the three months to December 2020, and one in seven expect to do so in the first three months of 2021.

If you need it, there is still support for business owners, with schemes now extended. Here are three options you may want to consider.

1. Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme has changed a few times since launching to reflect different restrictions. It has also been extended several times and will now run until 30 April 2021.

The scheme is there to help you maintain a workforce if your operations have been affected by Covid-19. If your staff have been placed on furlough, you can apply for a grant through the scheme to cover a portion of their usual salary. You can claim 80% of an employee’s salary for hours not worked, up to a maximum of £2,500 per month.

Since the scheme launched, over nine million people have been furloughed but still able to receive a portion of their salary through it. For business owners, it can help you retain staff so that when restrictions are lifted, you still have a workforce.

2. Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme can be used by businesses with a turnover of less than £45 million. It has been extended until 31 March 2021.

The scheme offers access to finances up to £5 million to support a business over the coming months. The borrowing can be accessed in several different forms, including business loans, overdrafts, invoice finances and asset finance, to suit you. The government will cover the first 12 months of interest payments and any lender-levied fees.

The scheme can provide a capital injection when you need it most, without having to worry about the cost of borrowing in the first year. However, it’s important that business owners think about the long-term too and how borrowing will affect cashflow in the future.

3. Bounce Back Loan Scheme

Again, the Bounce Back Loan Scheme has now been extended until 31 March 2021.

This scheme is open for small and medium-sized enterprises (SMEs) and other businesses requiring small loans. You can borrow between £2,000 and £50,000, with the loan being repaid over six years. There are no set-up fees and the first 12 months of interest payments will be covered by the government. Businesses don’t have to make repayments in the first 12 months, relieving some pressure as they continue to be affected by the social distaining rules.

It’s a capital injection that could mean the difference between closure and survival for some small businesses. However, as mentioned above, it’s still important to consider the implications it would have in the long-term and ensure the repayments are part of a wider plan.

If you’re a business owner and would like some advice during these unprecedented times, you can get in touch with our team. We’re here to help you manage finances and create a plan you can have confidence in, including your personal finances.

Upcoming changes in the Budget

The chancellor will deliver the 2021 Budget on 3 March 2021, almost a year after the last one. The 2020 Budget was dubbed the ‘coronavirus budget’ with the virus taking prominence over other issues. This year, it’s still likely to be a key focus and there could be some announcements to support business owners.

Keep an eye on our blog for updates and get in touch if you have any questions about what the changes could mean for you.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.