Covid-19 Report - SME Government Support
We are pleased to have co-led a survey, completed by 100 partners and other senior staff from leading accounting firms who serve SMEs across the UK. The survey explores the effectiveness of Government support for SMEs concerning Coronavirus and calls for some significant changes in approach.
Introducing the results of the study, Margaret Laidlaw, Head of Privately Owned Businesses for Mazars said 'We are delighted to have supported this study and the participating firms have made the results available to Government and to leading organisations working with SMEs.
Being willing to advocate changes in support where we believe they would be helpful is part of our overall commitment to ensuring SMEs receive the best support to enable them both to weather the immediate crisis and to build successful sustainable businesses in the tough environment we are facing in the coming years'.
1. Need to get cash to SMEs quickly
Against a background of a good level of overall support for the schemes in terms of their help to SMEs, concern remains on whether they are collectively enabling sufficient cash at a pace that allows SMEs to meet their pressing needs during this time.
In this context, the Chancellor's new Bounce Back Loans scheme, introduced after the survey was completed, is recognised as a step in the right direction. Sadly, there is still a strong feeling that there will be substantial job losses and/or many SMEs going out of business during the crisis and/or after it.
2. Support for two-week furlough period and concerns on treatment of employee directors
The Coronavirus Job Retention Scheme (CJRS), is overwhelmingly seen as the most important for SMEs. There is no significant challenge in terms of the businesses to which it applies, 80% recovery of salaries, a maximum payment of £2,500 a month and workers having to be fully out of the business.
More respondents however would support a two-week minimum period for furlough rather than the current three-week period and significant concern exists relating to how employee directors are treated within CJRS.
3. VAT deferral very welcome but worries problems may arise when payments fall due in 2021
The VAT and Self-assessment deferral schemes have been very well received, especially VAT which given it has provided immediate cash flow relief, it is recognised this is only temporary and that problems may arise early in 2021 when the deferred payments fall due.
4. Concern Business Rates Relief scope too narrow on grant relief/£50,000 income support cap
Reasonable support exists for Business Rates Relief but with concerns as to how local authorities are introducing it, some feel it applies to too narrow a range of businesses.
Similarly, on the grant funding and income support measures, there are worries about how the scheme is being administered by some local authorities and the £50,000 eligibility ceiling on income.
5. CBILS should be 100% Government guaranteed and worry on how banks are operating them
Coronavirus Business/Large Business Interruption Loan Schemes are undoubtedly viewed as the most problematic support measures. Many respondents still believe there is a lack of clarity regarding the information required by the banks, inconsistencies in how the different banks are operating the schemes and with the approval process seen as too slow and uncertain as to the outcome.
A substantial majority of respondents believe the loans should be 100% Government guaranteed rather than 80% as at present.
6. Support for a greater proportion of aid to business taking the form of grants
Last but far from least, whilst recognising it would potentially cost significantly more, there is nevertheless strong support for a greater proportion of the Government's Coronavirus support for business taking the form of grants rather than loans or payment deferrals.
You can download the report for free below.
Want to know more?
Anthony Carey Partner - Head of Board Practice
Funding Submission Support
CJRS Submission Support
The CJRS online portal opened on Monday April 20th and will be open 24/7. HMRC is looking to make the first payments from April 20th submission by April 30th. It is then aiming to make future payments within four to six working days after any further submissions. We are also aware that HMRC is predicting approximately 450,000 claims per hour.