How government money is helping UK entrepreneurs survive COVID-19

0
7

When the COVID-19 pandemic forced businesses to shut down overnight, the UK government responded with a series of financial measures designed to help business owners and their employees weather the worst of the crisis.

These included the Coronavirus Job Retention Scheme (CJRS), through which the government covers 80% of the costs of employment through grants, the Coronavirus Business Interruption Loan Scheme (CBILS), for small businesses, and a Covid Corporate Financing Facility (CCFF) and Coronavirus Large Business Interruption Loan Program (CLBILS) for large companies. Other aids include subsidies to trade tariffs and options to defer payment of VAT to facilitate cash flow.

Are the programs up to the task? According to a survey commissioned by the financial comparison platform KnowYourMoney.co.uk, 42% of UK businesses have closed temporarily due to the pandemic, with a higher figure among micro (51%) and small businesses (49%).

Almost half (48%) have staff on leave, but the majority (71%) have not yet received financial support from CJRS. More than a quarter (27%) of those who have successfully applied for a business loan during the pandemic have yet to receive it, a third (35%) believe the government has not done enough to help the sector private sector, 40% believing that startups have been overlooked.

Nonetheless, many entrepreneurs and startup founders have found that aside from some complexities around the application process and delays in responses and payments, programs are proving to be essential in helping their businesses weather the current storm.

Continued commercial development during containment

Savile Row’s first female tailor Alexandra Wood is famous for transforming high-profile men’s wardrobes and disrupting the male-dominated industry. She started her career as a seamstress in women’s fashion, but discovered a hidden talent for “making men look more beautiful”. The business she started with £ 1,000 is now running at over £ 300,000 a year.

When the crisis erupted in April, Wood got a grant of £ 25,000 from the government. She tried applying for the CBILS loan program, but gave up after three failed attempts – her bank simply did not respond to her phone requests. She has since successfully applied for a Coronavirus Bounce Back loan of £ 50,000.

She says, “We are using the money to fund the costs of the business while being forced to close, but we are also investing in updating our online imagery, marketing and social media spending to promote and increase our new offer of men’s clothing online. We are moving our business from one-on-one personalization consultations to a personal online shopping experience. We’ll also keep reservations to make sure we’re ready to act when the restrictions are lifted next. “

Manage the loss of major events

Promo Veritas, a London-based marketing agency specializing in ‘promotional compliance’ – ensuring that sweepstakes, contests and instant promotions run by major food and beverage brands are fair, legal and managed with integrity.

Founder and CEO Jeremy Stern explains, “A lot of our work is tied to major events sponsored by big brands, for example Pepsi and the Champions League, Toyota and the Olympics, Cadbury and the Premier League. We immediately felt the impact of COVID-19 with the cancellation of client projects and the team having to work hard to deal with the winners who had already won event tickets or in other cases were already in attendance. foreigner. “

Under lockdown, the 30-person team shifted to working from home, but within days it became clear that there wasn’t enough work for everyone, and Stern turned to the programs. emerging governments.

Fifteen people were put on leave, with the government paying 80% of their wages. Stern completed an online application with HMRC Online on April 26, which took 10 minutes, and within five business days the money was in the company’s bank account.

“Doing the math on the HMRC website is a bit of a hassle, but overall it worked well and certainly saved the jobs of several people,” he says.

He also applied for CBIL funding through his bank, below the £ 250,000 level, and admits it was frustrating. “The start of the complaint was straightforward and involved sending some basic information to our account manager, but then there was silence for two weeks,” he says. “Four weeks after that first request, the bank asked for more cash flow information, but we are hoping for a result this month.”

Stern also revised his forecast and submitted a revised corporation tax claim to HMRC, for much lower profit. “Within six working days we received a refund notification of over £ 70,000 on the basis of the review, compared to what we had already prepaid,” he says. “We have also chosen the VAT deferral option. Delaying payment for this is great for the cash flow, but we are paying PAYE to avoid accumulating too many liabilities in the new year. “

Pivot to online retail

The SEVEN BR7HERS Brewing Co was founded in 2014 by McAvoy brothers, Guy, 58, Keith, 50, Luke, 46, Daniel, 45, Nathan, 43, Kit, 38, and Greg, 36, inspired by the efforts of home brewing from their father in their home cellar. The company has grown year on year and in 2019 achieved a growth of 53%.

Before COVID-19, their beers were sold at some UK retailers and bar groups. With the lockdown, there has been the closure of its own breweries in Manchester and a rapid pivot to e-commerce, which previously accounted for 20% of the business, but is now close to 100%.

CEO Keith McAvoy found it frustrating to navigate government programs, but insists it was a game-changer for the survival of his family’s brewing business.

“Our financial controller left no stone unturned in offering grants, loans, VAT deferral and vacation assistance, and it was not a straightforward process,” he says. “We qualified for CBILS support and trade tariff subsidies, which were granted at the eleventh hour, putting us back in a healthy position to grow our e-commerce business, support our closed breweries and help us get through this. crisis. “

Protect the workforce

While some of the digital marketing agency’s clients Reflecting digital are thriving, others are not operational due to the impact of COVID-19. To alleviate the pressure to cover the salaries of staff they cannot generate income the company turned to the CJRS.

CEO Becky Simms said, “A lot of work has been put on hold and without government support it would have strained our business. We were impressed with how quickly the program was created and operational. We submitted our first claim the week it was launched and the money was in our account within three business days.


Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here