Five-point plan needed to support small businesses through new COVID restrictions
The Federation of Small Businesses (FSB) has written to the Chancellor of the Exchequer, Rishi Sunak, calling for a five-point support plan for small firms impacted by the latest wave of COVID-19 restrictions.
The letter urges the Chancellor to commit to maintaining existing support schemes for as long as the business disruption continues, and calls for five specific national support measures:
- Small Business Cash Grants – a second round of one-off grants of £10,000 through the Small Business Grant Fund (SBGF), plus targeted grants of up to £25,000 for small firms in the retail, hospitality and leisure sectors and new help for the supply chain, administered through the business rates system in England.
- Revenue Loss Scheme– a German-style scheme to reimburse small businesses for the financial impact of a significant loss in custom, whereby the government would cover a percentage of lost revenue compared to the same time last year.
- Directors Income Support Scheme – a taxable grant for directors of limited companies calculated at 80% of three months average monthly trading profits, paid out in a single instalment and capped at £7,500. This would mirror the existing framework offered by the Self-Employed Income Support Scheme (SEISS), avoiding the issues around dividends.
- Help for more recently self-employed – an extension of the Self-Employed Income Support Scheme at the end of January 2021 after the final date for self-assessment tax returns, to include the use of a 2019/20 tax return in time to qualify for the SEISS fourth Grant. This would help around 300,000 newer self-employed people who were left out of previous SEISS rounds.
- Emergency loans extension – greater financing ability for those who have used their allocations through Bounce Bank Loans, extending the period before repayments begin, and a student loans approach for debt repayment which means that loans are only paid when the company is profitable and can afford to do so.
FSB National Chairman Mike Cherry said: “While there is clear understanding of the overriding need to protect public health and combat coronavirus, fresh restrictions have brought renewed disruption and financial pressure for the many small businesses affected.
“While some of the flagship schemes have been extended, the current approach to lockdown grants in England is much less generous and is not covering the huge and increasing costs. We therefore believe the time has come for a second round of small business cash grants to match those in the first wave lockdown back in the Spring.
“Some had to close their doors at a few hours’ notice during what should have been the busy run-up to Christmas. Many will have filled their stockrooms, only to have their ability to sell the stock taken away suddenly.
“These businesses have already faced months of on-off disruption and lost revenue, many have already taken out loans. They need a new level of assistance to match the new level of restrictions forced upon them, to allow them to survive the period of vaccine roll-out.
“Debts are also piling up for many of those who were left out of the Self-Employed Income Support Scheme, including company directors and the more recently self-employed. Targeted support is needed now more than ever for these groups who have worked hard to build-up their businesses and are working even harder to keep them going through the crisis.
“Small businesses are at the heart of communities and the economy, and account for 60% of private sector employment in the UK. The future economic recovery will depend heavily upon them, and so helping them to see this through and get out the other side in tact is vital for jobs, growth, innovation and prosperity.
“All of this comes at a time when many small businesses are also having to navigate the UK’s new trading relationship with the EU as the transition period ends. This is adding further cost pressures, which is why support should be given to small firms in the form of ‘Transition Vouchers.’ These would provide up to £3,000 for small businesses to buy-in necessary tech, training or expertise.”
Businesses have already faced months of on-off disruption and lost revenue, many have already taken out loans. They need a new level of assistance to ...allow them to survive the period of vaccine roll-out.