Please Note: All information correct at time of writing on 1 April 2020. We do our very best to make sure our information is as up to date as possible, but we’d encourage you to check out our latest articles and to check the government website for updates as they happen.
This evening’s (1 April 2020) press briefing was held by the Business Secretary Alok Sharma. He was accompanied by Dr Yvonne Doyle, Public Health England’s Medical Director.
In the hours prior to the briefing, the press had focused on reporting the prediction of the potential collapse of around 800,000 small businesses within weeks if they were unable to access promised government funding support.
Mr Sharma reassured businesses that this was a priority for the government, they had listened to their concerns and would be taking action which would be outlined by the Chancellor “over the next few days “.
During the briefing he covered the following:
- From today, businesses will start to receive £22 billion in the form of business rates relief and grants of up to £25,000 which are being paid into the bank accounts of the smallest businesses.
- Local authorities have received more than £12 billion from the government and today he spoke with them and made it clear that this money had to reach businesses as soon as possible.
- He referred to the fact that he knew high street banks are working “really hard” to support the UK through increased credit facilities and mortgage holidays
- He also talked of business interruption loans being issued. The Chancellor, the Bank of England and the Financial Conduct Authority wrote to the chief executives of UK banks to urge them to ensure the benefits of the loan scheme are passed through to businesses and consumers as quickly as possible.
- He said it would be “completely unacceptable” for banks to be unfairly refusing funds to good businesses in financial difficulty.
- He reminded banks that UK taxpayers had stepped in to help them during the financial crash of 2008, and now it is time to do everything they can to repay that favour to support businesses and the UK people in their time of need.
- He acknowledged that, like all new schemes, the loan scheme would not be perfect from the outset. They have listened to concerns raised by the business community and are looking at ways they can ensure they get the support they need (we’ll be keeping a close eye on the Chancellor’s announcements to see how this intention will translate into effective measures).
- He reiterated that it was absolutely crucial that when we come out of this time of crisis, businesses are in a good position to move forward.
- Dr Yvonne Doyle took the press through the daily stats which showed a jump in new UK COVID-19 cases of over 3000 (previously it seemed to have levelled off at around 2500) and a slight rise in the use of motor vehicles as compared to previous days.
In the Q&A session, there was a continued focus on testing and PPE.
It will be interesting to see what further announcements will be forthcoming from the Chancellor over the next few days. The strategy so far seems to be calling upon the better nature of banks yet some of the barriers to funding still seem to be as present as ever. These include:
- The requirement of personal securities when providing funding. Patrick Magee of the British Business Bank has acknowledged this and described personal securities as the ‘tarmac’ which keeps lending flowing. However, the fact remains that many small business owners are reluctant to offer this up at such an uncertain time (and of course the loans are 80% guaranteed by the government who will also be making a payment to cover the first 12 months of interest).
- Many banks are refusing finance on the basis that the business is not viable as it is closed. In an interview, Patrick Magee explained that banks were being encouraged to apply the test of whether the business was viable immediately before the crisis rather than whether they are viable now but really the lending decision and criteria are up to the lenders. The government are clearly encouraging them to take a softer position, and bringing some political pressure to bear, but it will be interesting to see how the Chancellor plans to back this up.
- The practical obstacles of bank branches closing and people being unable to get through to their call centres.
The business rates grant information was interesting. When this was launched, government guidance was that businesses did not need to apply for this as local authorities would be writing to all eligible businesses. Interestingly, it’s been reported several local authorities have now put up links to apply for these grants on their websites.
We would strongly advise clients not to wait to be notified of this but check their local authority website to see if they can apply online and if not call their local authority to check eligibility and timescales for payment
Tracking changes and keeping you updated
We understand that the fast-moving and ever-changing nature of the coronavirus measures are confusing and can cause business owners lots of worries. The government has indicated that it will continue to roll out measures to support business and we will keep everyone updated as and when these developments are announced.
If you’re a Citation client and you’ve got questions about any of the financial measures listed above, you can call us on our advice line on 0345 844 4848.
If you’re not yet a client of ours, give our friendly team a call on 0345 844 1111 to chat through your business needs. And if you think anyone in your network could benefit from this information, feel free to share it with them.