Webinar: supporting SMEs impacted by coronavirus

Speakers:

• Deborah Fraser, Director for Regions, CBI (chair)
• Fiona Geskes, Principal Policy Adviser, Tax and Fiscal Policy, CBI
• Paul Scully MP, Minister for Small Business, Consumers and Labour Markets (guest speaker)

Access to finance:

• The Chancellor was adamant at the outset that we can’t let the economy suffer more than is happening at present, so government must be there to help firms to survive it
• When first launched, the loan scheme was clear about the unprecedented nature, but there were too many firms falling between the cracks – which led to CLBILS being announced
• However, banks are still unable to get enough money out to smaller companies
• The Chancellor has launched the ‘bounce back loan scheme’:
  • Short form, no ‘forward looking’ viability test
  • Solely a loan for those affected by COVID in the ‘here and now’
  • Money should go out within 24 hours of application being received
• We must ensure there’s enough flexibility in the system. We want to ensure firms can pay back the loan, but there are also a wealth of schemes/grants/loans going on without payback, in addition to loan based schemes. We must make sure we can do it in an affordable way
• The scheme must be proportionate in that it doesn’t damage economy and firms can continue to fund public services
• The government is doing pan-sectoral engagement and is hearing the issues and concerns of supply chains from across industry. Various government depts involved in finance and business rates will continue to hear evidence and engage with partners like CBI
• We need to keep an eye on the ‘new normal’ and how the economy adapts to this on a sector by sector/industry by industry basis.

Job retention scheme:

• Many SMEs, those with a smaller workforce or highly skilled roles, are less able to furlough half their staff and have others pick up all the responsibilities. There are other SMEs who would like to remain open but cannot afford not to part time furlough their staff in response to the reduced demand they are experiencing
• In response, there is already some flexibility from government on this such as extensions, and a cut-off date change in response to real-life examples
• Part of the flex in the JRS is the ‘three week on, three week off’ aspect to help address differing levels of need. JRS is not an income replacement scheme, it’s a means of protecting jobs and roles that would have had to be laid off permanently.

Rent:

• SMEs have expressed concerns that whilst landlords are prevented from evicting tenants, they are not prevented from issuing demands for payments, or winding up petitions which may bankrupt small businesses. Members would welcome more guidance from government for both parties during this lockdown and most importantly for when there could be remaining rent arrears post the lock-down
• The government gave a three month moratorium on evictions, after some landlords were using extreme ways of guaranteeing their rents, through statutory notices and winding-up petitions
• Going forward, the government recognises longer term support is needed, and they’re looking at all options at this stage. Please continue to feed in your views and experiences!

Restart:

• What are the plans to support our SME businesses in particular as we come out of lockdown to ensure health and safety of their people remains a top priority? This could be in terms of access to critical PPE equipment, the ability to practice social distancing – for some businesses this could be very challenging
• The government is working closely with SMEs on a route out of lockdown. Health is the primary concern, but businesses want as much certainty as possibly, to avoid big shocks
• A consistent approach is key.

Final thoughts:

• CBI can corral messaging and relay this to government
• Firms concerned should also work with local partnerships/schemes, such as LEPS, Be the Business etc.
• At present the government is trying to consolidate all of the salient information to make it easy for anyone to access it
• Small firms are inherently entrepreneurial, and this type of mindset will be vital for us in getting back going
• The government is in listening mode and wants to hear your views on schemes/what we should do differently.

Key questions we answered:

1. Has the government considered the cyber security impact? Particularly on small firms?

• The government wants to ensure consistent guidance. The crisis has brought lots of issues to the fore quicker than they would normally have
• Remote working and digital take-up is markedly rising amongst businesses and consumers. Government and parliament are keenly looking at this issue.

2. Is the government considering central policy guidance if a company is rejected from any of the finance schemes?

• There are no plans for this currently
• Loan schemes have all been administered by the British Business Bank, but are actually operated by commercial lenders, so they should have narrow parameters to prevent ‘falling between the cracks’
• Lending depends on the lender. Businesses should either go through LEPS/Growth Hubs or their local MP for guidance and to raise concerns.

3. What is the government’s thinking around late payments?

• This was already discussed in the government’s manifesto, but this is now accelerating
• More powers are being planned for the Small Business Commissioner
• Those in positions of authority need to call out these bad practices.

4. Are there plans for winding down some of the schemes?

• All decisions will be based on practicalities. The government wants to ensure that as many businesses as possible can open, as it’s vital to get the economy going
• The government is committed to keeping support flexible and forthcoming announcements will be based on the conversations they’re having with businesses.