COVID-19 Business Update – 21 October 2020
Welcome back to our Weekly Update. We hope you and your family are safe and doing well.
Lately, economists have been talking about a “K-shaped” recovery from the current recession. As this article in The Conversation explains, this kind of recovery happens when different parts of the economy recover at different rates. White-collar workers who can more easily work remotely may have an easier and faster path to recovery than blue-collar and service workers who must be physically present to do their jobs.
Moving forward is the only option we have to get through this crisis. Read on for this week’s updates and some ideas that will help us all move forward.
‘Time is Running Out’ Campaign Launched
The government launches the ‘Time is Running Out’ campaign, urging business leaders to step up their preparations for the UK leaving the EU on 1 January 2021. This call to action is to prevent businesses from getting caught out by new rules at the end of the UK transition period and get ready for changes and opportunities.
In just over 8 weeks, the UK will be leaving the EU Single Market and Customs Union. Chancellor of the Duchy of Lancaster Michael Gove emphasised that it is on all of us to put in the work to embrace the new opportunities and challenges that come with being an independent trading nation with control over its own borders, territorial waters, and laws.
You may check gov.uk/transition to see actions you need to take or get in touch with us so we can provide some expert guidance.
Record Number of Shops Close
A record number of 11,120 chain store outlets closed in England, Scotland, and Wales between January and June, while 5,119 opened, according to data published by the Local Data Company and advisory firm PwC. This means 6,001 net store closures were seen in the first half of 2020, significantly higher compared to 3,509 closures in the first half of last year.
Analysts predict many more closures to come as the research does not include outlets that were temporarily shut down due to lockdown rules, but might end up permanently closed.
If your business is one of those which are struggling due to the COVID-19 crisis, contact us today so we can help you bounce back.
UK Government Helps More Than 50,000 Businesses in Wales
Over 48,000 loans worth more than £1.3 billion have been provided by the UK government to businesses in Wales under the Bounce Back Loan Scheme. Also, more than 1,600 loans amounting to £373 million have been provided under the Coronavirus Business Interruption Loan Scheme.
As part of the Winter Economy Plan, Chancellor Rishi Sunak announced that more than a million businesses who took advantage of the Bounce Back Loan will receive further protection from the COVID-19 crisis through flexible repayments under the new Pay as You Grow system.
If you want to consider your available options for government assistance, flick us a message so we can help you assess and apply for business support schemes.
Job Support Scheme Extended to Cover Closed Business Premises
The Job Support Scheme will be extended to support all UK businesses legally required to close as a direct result of local or national COVID-19 restrictions (including businesses required to provide only delivery and collection services from their premises).
Through this, employers will receive grants to pay two thirds of the wages of staff who were employed on or before 23 September and are unable to work for a minimum of 7 consecutive days, up to a maximum of £2,100 a month. Employers will not have to contribute to wages but will have to cover pension and national insurance contributions.
The new Jobs Support Scheme will commence on 1 November 2020 and should help cushion the impact of the pandemic. More details can be found in this factsheet with further guidance due “in the coming weeks”.
Support for Areas on Very High Alert
Prime Minister Boris Johnson recently announced the following support for areas on Very High Alert under the new Three-Tier COVID-19 Lockdown System:
- The Job Support Scheme, combined with Universal Credit, will allow low income individuals affected by business closures to receive at least 80% of their wages.
- Up to £465 million will be provided to implement and enforce restrictions on top of the £1 billion of additional funding for local authorities across the UK.
- The government will work with local authorities to allocate testing and introduce local contact tracing.
If you find it difficult to adapt to the new Three-Tier Lockdown System, message us so we can help you operate your business safely and more effectively.
What Does the Three-Tier COVID-19 Lockdown System Mean?
Under the new three-tier system of COVID-19 restrictions, every area will be classified as being on medium, high or very high alert – tiers one, two and three. Here’s a rundown of the restrictions for each tier as compiled by BBC:
Tier One- Medium Alert
Areas with the lowest rates of infection will be placed in Tier One.
- The rule of six applies, which means that you may not meet in a group of more than six people, indoors or outdoors.
- Face coverings must be worn in various places indoors such as in shops and on public transport.
- You should wash your hands regularly for 20 seconds.
- Pubs, bars, and restaurants all have to close at 22:00.
Tier Two- High Alert
The rules for Tier One also apply in Tier Two.
- You are not allowed to meet socially with people you do not live with indoors.
- You can still meet friends and family outdoors, but only in a group of up to six people.
Tier Three- Very High Alert
Tier Three is where areas with the most rapidly rising transmission of coronavirus will be placed.
- You are not allowed to meet socially with anybody who is not part of your household or your support bubble indoors or in certain outdoor locations.
- You cannot meet in private gardens or pub gardens, but you are allowed to meet in parks, beaches, countryside or forests, as long as you are not in a group of more than six.
- Pubs and bars will be closed unless they are serving substantial meals and only serving alcohol with meals.
Currently, only the Liverpool City Region is in Tier Three.
Drones To Carry COVID-19 Samples Between UK Hospitals
The UK Space Agency has backed a medical drone delivery service which will allow the machines to carry COVID-19 samples, test kits, and personal protective equipment between hospitals in the country.
Apian, a start-up company founded by NHS staff, will establish a network of secure air corridors for electric drones to navigate via satellite-enabled GPS. Through this project, courier call-out waiting times, unnecessary physical contact, risk of secondary virus transmission, and the workload of NHS staff will be reduced.
The project will be based at Broomfield Hospital in Chelmsford and supported by the local Anglia Ruskin University as the academic partner.
Peer Networks for Businesses
Peer Networks is a peer-to-peer networking programme for small- and medium-sized businesses delivered locally by a network of Growth Hubs across England.
Through the Peer Networks, groups of individuals can discuss and work through common business challenges. Whether you experience business issues in finance, HR, sales, or marketing, expert facilitators can help you establish a trusted support network that will empower you to improve your business performance.
In order to join this programme, SME businesses must:
- Be based in England
- Have been operating for at least one year
- Have at least five employees
- Have a turnover of at least £100,000
- Aspire to improve
You can check further details here. Meanwhile, if you prefer having a dedicated business advisor and more focused business guidance tailored to your unique situation, get in touch with us so we can schedule a consultation.
New Grants for Northern Ireland Businesses
Two new schemes that will help businesses in Northern Ireland to recover have been announced. These schemes will be administered by Tourism NI and Invest NI, and will provide £8,000 grants for businesses.
The Invest NI scheme contributes toward the cost of an adviser to carry out an analysis and strategic review of businesses. It is targeted at manufacturing, construction, professional services, information and communication, and technology businesses.
To be eligible for this grant, you must be a micro or small to medium enterprise with annual turnover of at least £500,000 that experienced a decline of 40% in turnover between April-June due to Covid-19.
Meanwhile, existing tourism businesses operating in Northern Ireland are eligible for the Tourism NI scheme. This grant is intended to support such businesses and help them survive the winter period.
If you need guidance with your application or would like to know about other funding assistance programmes, book a consultation with us so we can help you assess your options.
VAT cut extended for Hospitality and Tourism sectors
Part of the Chancellor’s announcement includes an extension of the VAT cut for the hospitality and tourism sectors. The temporary reduction of VAT rates from 20% to 5% will remain in place until 31 March 2021 instead of January.
The cut applies to food and non-alcoholic drinks, accommodation and admission to tourist attractions across the UK.
Giving businesses flexibility to pay back loans
More than a million businesses who took out a Bounce Back Loan will be given flexibility with repayments through a new Pay as You Grow system. We’ll keep you informed as we get more details.
What funding is available for your business?
While many businesses are in a state of financial distress, the government continues to provide support for business recovery.
To cover the impact of the crisis, there are grants made available by the government such as the £1.25b Future Fund and R&D rescue package for fast growth businesses and smaller businesses with a Research & Development focus. The UK government has recently expanded this rescue package for start-ups.
If your business has been severely hit by COVID-19 and you need more support, the government is giving businesses access to financial support through various initiatives such as the Bounce Back Loan Scheme, where you can get up to £50,000 no-interest loans for the first 12 months.
The Business Interruption Loan Scheme offers a maximum loan of £5 million made available through commercial banks, lenders have provided £12.2 billion worth of facilities to 55,674 companies.
You can also claim for 80% of your employee’s wages plus any employer National Insurance and pension contributions if you have put them on furlough because of COVID-19 under the Job Retention Scheme, which has been extended until the end of October. You can check your eligibility here.
With all the financial assistance schemes available for businesses, it can be difficult to assess which one is suitable for your business. Get in touch if you need some help.
Transforming Economic Challenges Into Opportunities
Since early this year, global economies have faced unprecedented challenges due to the COVID-19 crisis. Now, many of the pandemic-ridden countries are experiencing their first recession in decades.
Governments focused on driving economic recovery through business support and cutting of tax rates. Besides these government-backed schemes, here are additional opportunities that you can consider for your business to overcome the current challenges:
- Review your business and revisit contracts which can potentially be renegotiated for a better deal.
- Consolidate your debts to be able to take advantage of growth opportunities.
- Acquire a like-minded business or consider partnerships and joint venture opportunities.
- Upskill your team during less busy times.
- Innovate and automate your processes. This is the time to explore new revenue streams such as online sales.
- Restructure your business when you see fit.
- Check your expenses, cut down on unessential costs, and outsource if it will lead to cost-savings.
- Slower business activity means you have more time in your hands than normal. Spend your time knowing more about your target market and revamp your marketing.
If you need some guidance in doing all these things, flick us a message so we can work out a plan and share our expert advice tailored specifically to your business.
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