Members’ survey results - COVID-19 business support schemes
CAs give their views in a members’ survey on COVID-19 business support schemes
Over half of respondents (54%) define the business they work for as an SME; 28% as self-employed and 18% as large. In terms of jurisdiction, 71% have their business in Scotland; 22% in England.
Overall, the majority of feedback on the level of government support and speed of delivery is very positive. The Job Retention Scheme (JRS), Time to Pay (TTP) and to a lesser extent Small Business Grants were the most commonly used. Members valued the direct benefit these schemes gave to cashflow allowing businesses to remain intact, maintain jobs throughout the lockdown period and the speed of the delivery process. However, it was suggested that greater flexibility of the eligibility rules to assist different business needs would help e.g. part time JRS but there is a trade-off - payroll calculations are increasingly complex.
Increasing debt was less popular due to concerns about increasing debt levels in the economic environment and level of uncertainty around future business demand. Businesses with high fixed costs and significant loss of income struggle and for those with higher leverage, some suggested that a portion of grant rather than government loan guarantee would help.
ICAS comments on the balance of debt funding in our response to the Scottish Government Economic Recovery Working Group (page 5) recommending that seeking to maintain normal gearing ratios and patient finance are important to support business resilience.
Of the loan schemes, the Bounce Bank loans scheme received the most positive feedback with 91% of respondents stating the scheme fully or mostly met their needs. Its simplicity, availability and speed of process are praised.
CBILS was less popular (there is limited data on members’ use of CLBILS). Although the intention was noted as good, experiences were mixed. For some, the delivery has been slower and the level of loan approvals variable with some only receiving a fraction of the funding applied for.
It is believed that this was probably driven by the interaction with various banks who must also apply their own criteria to assess risk and have their own requirements to approve loans in addition to the British Business Bank rules. This can make the scheme more complex to deliver. Our article Insights from bankers for CBILS and CLBILS shares the lenders’ views and tries to help dispel common misunderstandings between lenders and borrowers to enhance the likelihood of loan approvals. It also comments on why private equity funded businesses may be more likely to struggle to get loan funding.
Small Business Grants received variable feedback reflecting inconsistencies in delivery processes and outcomes across different local authority areas. It needs to be clear why applications were refused. Greater flexibility so that payments reflect need, rather than applying a fixed grant amount whatever the size of business was suggested.
Transitioning out of lockdown is a key concern. It is believed that life will not return to normal for a lot of sectors in the short to medium term and businesses seek an understanding of how the government can best continue to support affected industries and drive economic growth without ultimately leading to a substantial increase in taxes.
The importance of a transitional approach to wean business and staff off the support mechanisms to help them adapt to the changes and meet uncertain demand is noted in our response to the Scottish Government Economic Recovery Working Group (paragraphs 8 and 9). A holistic approach will be needed to manage the exit given the interaction of schemes and reliance of some businesses on a blend of different schemes, with different deadlines and ongoing uncertainty of recovery.
