'It's a struggle': the small business owners trying to survive coronavirus lockdown
Small businesses have struggled since the the coronavirus lockdown began with many not being able to pay employees sick pay and one survey warning that almost a fifth of SMEs could collapse within a month.
Income subsidies
Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.
Loan guarantees for business
Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.
Business rates
Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.
Cash grants
Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.
Benefits
Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.
Sick pay
Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.
Other
Local authorities to get a £500m hardship fund to provide people with council tax payment relief.
Mortgage and rental holidays available for up to three months.
On Thursday, Rishi Sunak banned banks from requesting personal guarantees for emergency loans to small businesses amid criticism of the way a government-backed rescue package was being administered. Smaller enterprises have been offered business interruption loans but it emerged that banks arranging the state-backed borrowing had been seeking personal guarantees, which mean borrowers often have to put their homes on the line.
Despite the revisions to the aid programme, some small business owners still feel that it may not be enough.
Cleaning services
Kim Langley, 30, who runs a cleaning business in Leicestershire is not sure the changes are of much help to her. “I’ve never had a loan and I feel if I applied for one I might struggle to make any profit because I’ll be paying it back,” she said. “I tend to keep prices low for our loyal customers so I think it would be difficult.”
Langley started the business three years ago and employed four people but now, because of the coronavirus, she has had to let them all go. “I lost 14 customers and so had to cut their hours,” she said. “Now I only have one job left – cleaning the office of a company that recovers emergency services vehicles.
“The girls asked me about sick pay but I simply couldn’t afford to pay £95 a week with nothing coming in. I spoke to them and said they either finish now and claim what they can from the government, or they can stay on but there may not be a business to come back to. In the end I let them all go.
“I’ve paid off all my suppliers and insurance and I’ll pay myself at the end of next month but then that’s it. If it all goes wrong I’ll have to dissolve the company. If I come out the other end I’ll be surprised.”
Joinery
Brian Wright, who has been running his joinery business in Chatham, Kent, for 20 years, said the lockdown has been a nightmare so far. “All of our suppliers gradually ground to a halt after the lockdown was announced,” said the 53-year-old.
Wright doesn’t believe the latest measures would make a great deal of difference: “The removal of personal guarantees would help but I’d need to look into the small print. When you’re trading hand to mouth, taking on extra debt is not ideal.”
Totally Bespoke Joinery in Chatham specialises in making timber staircases and fitted furniture. It employs four people, specialising in timber staircases and fitted furniture, and Wright has used the government’s furlough scheme, in which employees are temporarily laid off and 80% of their pay is covered by the state. “I’ve furloughed them but can’t top up the extra 20%. I’m just working with the cash I’ve got at hand,” said Wright. “The difficult thing is that I don’t get any help as company director, even though my salary is comparable to what my guys get.
“It’s a struggle. I’ve got about £68,000 worth of work sitting on the shop floor because I can’t install them. I’ve deferred all payments for about three months which will just about keep us alive for the same amount of time. I won’t be able to pay my supplier invoices from March so I hope they will be lenient. I’m just trying to make ends meet and this has thrown a spanner in the works – a big one.”
Beauty industry
In Newcastle, hair salon owner Maddi Cook thinks the removal of personal guarantees on emergency loans is good but there’s still more to be done. “I know they’re trying to turn noes into yesses but people will still be left out,” said the 31-year-old. “The people who are really going to suffer are those who are not hugely wealthy. It feels like the same thing is happening again.
“I’m not keen on taking out a loan. The big banks will only lend a minimum of £25,000 and that’s too much. I also don’t want to be in debt as we’re not sure what will happen after all of this.”
Cook has been running Ritual Salon for five years, which includes leasing out her facilities to hair dressers. “I have two chair renters who pay me a fixed weekly rent,” she said. “My salon is on a large premises owned by my landlady. She is able to get a £10,000 grant and has said we don’t need to pay rent which is helpful. Since the lockdown I’ve lost my main income. I make a bit of money from my coaching business but that is only a couple of hundred pounds a month. It’s the people like my renters who I worry about – their income is down by 40% now.”
Food and delivery
Sajjad Rahman, 38, has been running Taste of India on the Isle of Sheppey for 29 years and can obtain a £10,000 business rates relief grant unveiled in last month’s budget for firms hit by the Coronavirus-related slowdown. “We’re eligible for the government grant which is helpful,” said Rahman. “We’re lucky that we’re a takeaway only business. Most restaurants are 60% sit in and 40% takeaway, but they’ll be lucky if they make 20% of their income in this climate.
“I think removing the personal guarantee is a good move by the government. It shows they’ve realised it wasn’t working. We don’t need a loan at the moment but I think it would help a lot of people in my position move forward if they need to.”
Rahman’s takeaway business employs five people and they’ve been just as busy since the lockdown: “Nothing has changed much as people have carried on eating. Safety is a big priority when we go out to deliver food – I’ve invested in medical grade alcohol gel in the shop and kitchen, and everyone wears gloves and masks. I worry though about the restaurant industry as a whole. If the shutdown is longer than three months it would be catastrophic. I don’t know how people will be able to survive.
“I’m a bit nervous but we’ll just ride it out all together. It’s one of the reasons why I wanted to give back to the NHS and have been giving away free meals to all staff. So far we’ve given away more than 80. I regard them as superheroes, putting themselves on the frontline. I think we should respect them as we do soldiers dodging bullets on the front line.”
Creative design
Stuart Baker, 31, and Simon Petty, 30, operate a creative consultancy and design studio in London and feel the chancellor’s proposals would make things easier for them. “I don’t own any assets but Simon does,” said Baker. “So not having to put his house up as collateral is a big plus.”
Out of Order Design was founded two years ago and Baker and Petty work with four to five freelancers depending on the project. “It seems quite daunting to apply for a loan, not to mention time-consuming and stressful,” said Baker. “But if some barriers will be removed then that would help. Our monthly salaries are £1,750 so well below the £2,500 threshold for the grant on the self-employed income support scheme.
“We haven’t had any jobs cancelled, just postponed. One is £15,000 for an installation which has been pushed till the end of summer, and another is £5,000. We haven’t paid our rent which was due on Wednesday and we’ve delayed our corporation tax which is £11,000. We’ll be fine for the next few weeks. We’re just working from home as best we can on projects that can come to light after all this.”
