It is quite evident that nobody is immune to the effect of pandemic’s effect. Unemployment rates have skyrocketed and majorly, the small businesses have been impacted. COVID-19 is no longer just a health crisis, it has turned into a major social and economic crisis across the globe. If we help the small businesses during this global emergency, it can reshape the economic crisis staring at our face right now. ⭐Personal Finance ⭐COVID-19
23 March 2020 – the day when Prime Minister Boris Johnson announced nationwide shut down of all the social avenues, and shops to contain the spread of the virus. Back then none of us had imagined that our lives will have to go through such a drastic transformation. According to a survey conducted by Simply Business, the pandemic can cost small business owners £11,799 on average. As almost 67% of the small businesses have been forced to close owing to this global health crisis. Chancellor Rishi Sunak has announced £330 bn to support small and big businesses alike. While the government is doing everything that it can to uplift the economy, there are a lot of ways in which, we can also contribute towards the rebuilding of our economy. The sooner we get out of this, the better.
In this article, we will discuss:
- Difficulties and challenges faced by small businesses
- What support is available for small businesses by the Government?
- 3 ways to support small businesses
Difficulties and challenges faced by small businesses in the UK
Whether it’s the small businesses or the large setups – they have been proved to be vital for our country’s economy. Small businesses account for 99% of all the businesses in the UK while providing 33% employment. The consequences of the pandemic on the structure of the way they function to contribute to the economy are significant. Although the business owners have been creative enough to find ways to promote themselves to keep the trading going on, the impact cannot be neglected.
- Approximately 234,000 SMEs have permanently ceased their trading.
- 35% of the small business owners have borrowed cash from their friends and family.
- 41% of the owners feel that their businesses are at the risk of closing permanently.
- The support provided by the government was used by only 56% of the small business owners.
- 44% of the owners are unable to access government support.
- 14% of the businesses are likely to close down within 1 to 3 months.
- 12% of the small business owners think it will take 2-3 years to get their business back on track.
- 36% are concerned about running out of money for their businesses.
- 12% worry about going bankrupt.
- Only 10% of the business owners are confident about the future of their business.
These statistics reflect that the overall scenario of small businesses in the UK is somewhat gloomy – businesses are adopting new ways to beat the downward trajectory. A lot of business owners are focusing on social media and messaging apps to promote their businesses. Despite financial pressure, people are hopeful about the future.
What support is available for small businesses by the Government?
Government has designed grants to help small businesses during COVID-19 crisis. Broadly, the financial support packages for small and medium-sized businesses are divided into 3 categories:
1. Coronavirus Business Interruption Loan Scheme (CBILS)
This scheme is aimed at helping small and medium-sized businesses to access loans up to £5 million, where the Government guarantees 80% of the finance to the lender. Also, the Government will pay the interest charged and other associated fees to the lender on the loan taken by the small businesses for the first 12 months.
If your business has an annual turnover of up to £45 million, you can apply for a loan up to £30,000 or more. However, you have to prove that your business wasn’t witnessing any difficulty on 31st December 2019.
2. Coronavirus Future Fund
This fund is designed to help UK-based companies ranging from £125,000 to £5 million. If your business relies on equity investment and you are unable to access any other government business support programmes that are available – then you can apply for these convertible loans.
There are a few eligibility criteria that your business must meet and one such condition is if it has raised at least £250,000 in equity investment from 3rd party investors over the last 5 years. You can check your eligibility here.
3. Bounce Back Loans Scheme (BBLS)
Launched on 4 May 2020, is aimed at helping small businesses by providing them loans ranging from £2000 to £50,000. To become eligible for this loan, your business must be established before 1 March 2020. A business can borrow a loan up to 25% of their annual turnover, but the cap is set at £50,000, and it has a fixed rate of 2.5%.
You can use the loan for a variety of reasons, for example, to cover your investment costs, pay bills, wages, debts, or to invest in your business for expansion.
Learn more about Bounce Back Loans.
3 ways to support small businesses
Being an integral part of the nation, we can help the local businesses to survive the economic meltdown by contributing in whatever way possible. There are various ways you can support the businesses, here are 5 easiest ways to do so:
1. Shop – both online and offline
A lot of brick and mortar shops are testing the waters by launching their services on online platforms. Try shopping online as well as offline from your nearby shops. The need for maintaining social distancing has led several retailers to shift online. From supplying beers at your doorstep to delivering books – small businesses are innovating their ways to keep themselves moving despite the setback.
2. Post good reviews online
If you find a good takeaway restaurant or you liked the service of an online/offline retailer – don’t hold yourself back from spreading the word. Take to the social media and let your followers and friends know about the food joint or avenues. This will help the businesses to attract more footsteps both online and offline.
Leaving a good review of Google or any other platform will also be beneficial. Even if you are slightly satisfied with the services that were offered to you – ensure you are putting in a word to promote their businesses.
3. Buy gift cards
If you can’t shop from your local shops and they have gift cards, buy it from them. Send it to your loved ones on Christmas. If you do not need anything from the shop, your friends or family may utilise it.
Try purchasing the gift card using your credit card so that you will earn a few reward points that can later be used.
Looking at the current spread of the virus, the government may plan for further lockdowns. This could spell further troubles for the small business owners. Businesses and respondents need to strategize their plans and actions accordingly. With lockdowns in place, the government may also introduce new funds to keep the economy at a stable phase. Adoption of new technologies and expanding products and services are some of the techniques that can prove to be helpful.
Keep supporting your local businesses and spread the love!