The disruption caused by the Covid-19 pandemic is already apparent. I cannot recall life and business changing so abruptly. I imagine that this must have been what things felt like in 1939.
Our firm priority as a society must always remain to protect each other by preventing the virus from spreading further and impacting the vulnerable.
The economic impact of social distancing measures is starting to be felt. Acutely in some sectors, however, it is impossible to believe that any business will be unaffected. How we approach this and the actions we take will define the outcome. We all want to see healthy, thriving businesses providing jobs, security and prosperity for our communities.
Measures to support business
Governments across the world have announced a series of measures aimed at reducing the economic impact. While objectives are shared, the actions each country have taken have been different in focus and scale.
Germany has announced ‘unlimited loans’ in a bid to reduce the number of businesses collapsing in the face of the virus, with the Spanish government unveiling a €200 billion package to prevent businesses against bankruptcy.
President Trump’s administration has announced a $1tn plan involving both tax holidays and direct cash payments to citizens.
France’s response has been swift and categoric with President Macron stating that no French company whatever its size will be exposed to the risk of collapse. This week President Macron announced a package of €45bn to help small businesses struggling with the outbreak.
On 17 March, UK Chancellor, Rishi Sunak, set-out a further economic response, following his recent budget announcement. Measures include an additional £330bn of government-backed and guaranteed loans, equivalent to 15 per cent of GDP.
The Chancellor has committed to have these loans up and running by the start of next week, aiming to support liquidity for larger firms, in addition to helping SMEs by extending the new Business Interruption Loan Scheme announced in last week’s budget from £1.2m up to £5m with no interest paid for the first six months.
The Chancellor had already announced scrapping business rates for businesses in retail, leisure and hospitality with a rateable value of less than £51,000, in addition to providing these businesses with an additional cash grant of up to £25,000 per business. The Chancellor has now said this business rate holiday will apply to all businesses in those sectors, irrespective of their rateable value, on top of extending cash grants for small businesses, raising them from £3,000 to £10,000.
These are welcome measures, though the Chancellor will undoubtedly be called upon over the coming hours and days to go further. Now is not the time for partisan politics and we need to rally behind the Government to support the measures introduced, and to help to deliver the support required by businesses.
Over the coming weeks, we are likely to see the perennial issue of late payment become more prevalent and severe.
If we are to avoid significant numbers of businesses failing and rapidly rising unemployment it is vital that working capital funding continues to oil the wheels of industry.
At a time like this, companies that currently do not borrow may need cash to continue trading and paying staff. There is tangible support available for SMEs in the invoice finance market. The funding is flexible, well priced and immediately available.
Normally in a blog like this I wouldn’t plug our business. However, these are unusual times and we may well be able to help many of the businesses in need of support right now. We are one of the leading invoice finance providers in the UK and are absolutely committed to playing our part. We also provide Trade and Export Finance, HP and Leasing as well as FX.
In addition to the initial measures we have taken to protect our clients, such as moving to remote working and ensuring we have plenty of funding to support their businesses we have written to remind them of what we offer and what we’re doing to help. You can read that here.
Whilst we will all look to government for help and guidance, there is a lot we can do personally and collectively. Staying safe and protecting businesses is a good start.