Businesses in danger?

Some businesses are expected to collapse during the pandemic

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What problems face small businesses during the pandemic?

By Joe Harker

Just as the population of the UK has gone into lockdown, so too has the economy.

That which remains open is considered key to tackling the coronavirus pandemic, all else has been deemed superfluous and told to close.

It is not known when the situation will return to normal and people cannot afford to sit around doing little beyond paying the bills and buying food, the same goes for many employers.

The Claim:

A business with no customers cannot operate for long, particularly if it is still paying staff and rent for months without any earnings.

Those with large cash reserves may be able to afford to batten down the hatches for the time being and wait out the coronavirus, but many small and medium businesses can't afford the wait.

The BBC reports that around a fifth of small and medium sized businesses will not receive the cash they need to survive for the next four weeks.

A group of accountants has estimated that between 800,000 and a million companies across the UK will need to close, with some businesses telling the BBC that banks had refused them emergency loans on the grounds that it would not comply with government rules.

The government has introduced measures which would allow businesses to ask their local bank for Coronavirus Business Interruption Loans of up to £5 million, but many who have applied for the loans have been turned away after being told they aren't eligible.

Others cannot even get through to their banks to request a loan, with phone lines busy enough to keep out repeated attempts to establish contact.

Even more business owners have said the loans wouldn't even help anyway as it would saddle them with mountains of debts which would render their enterprise financially unsound. Many businesses which would otherwise turn a profit and continue to operate will struggle with massive loans to pay back.

The Counter Claim:

However, chancellor of the exchequer Rishi Sunak appears to know that not every small or medium business is going to survive the coronavirus.

He has admitted that despite the government's multi-billion pound measures to protect the economy from the pandemic they "can't save every job and business".

There is help with paying employees and there will be help for the self-employed owners if they can hold on for a couple of months but the chancellors has already accepted that he can't save everyone and doesn't look likely to introduce drastic measures to prevent any business from collapsing.

It's an approach intended to balance protecting the economy, protecting the public and ensuring the government isn't completely broke after the crisis is over.

The Facts:

There is consideration over widening the coronavirus support grant, which has paid £10,000 to around 7,000 small businesses already and as a grant rather than a loan they do not have to pay it back.

Small businesses which operate from a premises with a rateable value of less than £15,000 are eligible for the grant.

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BBC

A fifth of smaller firms 'will run out of cash'

Nearly a fifth of all small and medium-sized businesses in the UK are unlikely to get the cash they need to survive the next four weeks, in spite of unprecedented government support.

That's according to research published today, which suggests that between 800,000 and a million businesses nationwide may soon have to close.

Many firms have told the BBC that banks have refused them emergency loans.

Others can't get through on the phone or were told the money will take weeks.

The banks say they are following the rules set out by the government.

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