Small companies are calling for a multi-billion greenback Covid-19 assist bundle
Small businesses have asked the Chancellor for a multi-billion dollar support package to take it to the other side of the pandemic.
Mike Cherry, national chairman of the Federation of Small Businesses, has written to Rishi Sunak to inform him of his proposed small business support package.
Measures include a second round of £ 10,000 grants, a new German-style reimbursement system for lost trades, improved terms for government-backed bounce-back loans and income support for the newly self-employed.
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Small businesses with fewer than 50 employees make up 99 percent of all businesses in the UK. SMEs make up three fifths of all employees in the private sector.
In particular, the FSB has demanded:
- Small business cash grants – A second round of one-time grants of £ 10,000 through the Small Business Grant Fund (SBGF) and targeted grants of up to £ 25,000 for small businesses in the retail, hospitality and leisure sectors
- Revenue Loss Scheme – A German system to reimburse small businesses for the financial impact of a significant loss of customs duties, where the government would cover a percentage of the lost revenue compared to the same period last year. The German version of this program costs EUR 11 billion per month
- Directors Income Support Program – A taxable grant for directors of limited liability companies calculated on 80 percent of the average monthly trading profit of three months, paid in a single installment and capped at £ 7,500. This would reflect the existing framework of the Self Employed Income Support Scheme (SEISS) and avoid the problems related to dividends
- Help for newer self-employed – An extension of the self-employed income support system at the end of January 2021 after the deadline for the tax return for self-assessment to include the timely use of a tax return for 2019/20 in order to qualify for the fourth SEISS grant. Around 300,000 self-employed people who did not qualify for assistance for three years before the system came into force because they had not been active for three years could be approved by accepting their tax return for 2019-20
- Extension of emergency loans – Extension of the period before the start of the repayment of the bounce-back loan program as well as a “student loan” approach to the repayment of debts. This means that debts are not paid back until the small business is profitable and can afford it
Mr. Cherry has written to Rishi Sunak saying that “new restrictions have caused renewed disruption and financial pressure for the many small businesses affected”.
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“While some of the flagship programs have expanded, the current approach to lockdown grants in England is much less generous and does not cover the huge and rising costs. We believe, therefore, that the time has come for a second round of small business cash grants similar to those of the first wave this spring. “
On Saturday, the FSB called on the government to consider converting “unmanageable” Covid debt of small businesses into joint corporate ownership. Four out of ten small companies described their indebtedness as “unmanageable” in an FSB report published over the weekend.
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