17 April 2020

The Coast to Capital area is home to over 90,000 registered businesses which are predominantly identified as micro (0-9 employees) or small (10-49 employees). These account for 98.5% of all businesses.

Before COVID-19 many of our micro, small and medium sized businesses were struggling to scale up their ideas and faced challenges securing investment capital and accessing the equipment and workforce needed to meet their potential. Now, the focus for the majority of these businesses is survival and our Growth Hub is working hard to direct these businesses to the best support and is offering 'SME Emergency Response Clinics' to address topics of most relevance to the challenges being faced by small businesses, in particular finance and funding.

 

We are pleased to report that within two weeks of launching we are issuing the first of our grants to small businesses from our new £2 million Backing Business Fund. This fund is designed to complement the wider support measures announced by the Government and rather than under-writing businesses' costs help firms adapt, evolve and innovate in response to COVID-19. Here are just some of the responses from businesses this fund will help to thrive rather than just survive.

 

"Many thanks to Coast to Capital who have awarded us £21,000 from their Backing Business Grant. We'll be putting this towards IT investment and some exciting digital initiatives over the coming weeks!"

 

"Super grateful and excited to be awarded a £24,000 Backing Business Grant from Coast to Capital to adapt and evolve our onsite brewery which will allow us to take a huge leap forward in providing a home delivery service."

 

"In these unprecedented times it was of great help that the funding was with us within a week of application and this has enabled us to make quick investment decisions to mitigate the impact of COVID-19. This includes the purchase of new hardware and software to engage with our customers remotely in innovative new ways and invest in reaching new clients through a broad and professional digital marketing campaign."

 

We have been asked why this fund is not open to the smallest businesses. This is because we are trying to target our support on firms which are scaling, employing more staff, and have been trading successfully for some years in the region. Our evidence base for the region shows that these are particularly scarce in the Coast to Capital area, and will be vital for our future economy.

 

Falling through the cracks

 

Whilst many small and micro businesses are seeing the Government's Small Business Grants, the Retail, Hospitality and Leisure Grant Fund and the opportunity to furlough staff of real benefit and support for their business, it is becoming apparent that there may become a growing number of businesses that could fall through the gaps for receiving the cash grants related to payable business rates. This is a particular issue for those working in co-working or shared space where the landlord is listed as the payer of the business rates and would therefore, if eligible, receive the grant.

 

"There is a real danger that by the time we start coming out of this lockdown crisis that the grassroots of our economy, in the 30,000 start ups and freelancers, are simply not there to help us rebuild. At the moment any freelancer or start up business, trading under 2 years with no rateable office or premises gets zero support.

 

 

Just within the Freedom Works network this impacts on approximately 300-400 businesses, and I know of two other co-working spaces who could easily add another 300-400 each. That's around 1,000 in the Coast to Capital area alone. The majority of these micro businesses are good businesses run by people who have taken the risk to set up their own business or go on their own...They are in effect your SMEs of tomorrow who will help deliver to the public purse in taxes in years to come. There is a real danger that without practical support we will lose this group, and in turn having a negative impact on our economy for years to come."

 

Jon Trigg - Founder and Managing Director at Freedom Works Ltd

 

FSB are also championing the plight of micro and SMEs that are falling through the cracks of Government support, most notably those set up as limited companies, paying baseline PAYE and taking (taxed) dividends from (taxed) profits. FSB estimate there could be up to five million in this group.

 

"The UK economy, society and local communities are going to need as many as possible to be in a position to reactivate their businesses when this public health emergency is over. We have heard directly from hundreds who are not covered by this [Self-Employed Income Support Scheme] scheme. We call on the authorities to look urgently at what help can be provided to those who miss out on the income support for self-employed."

 

FSB National Chairman Mike Cherry

 

There are still gaps in support for micro Ltd Companies without 'rateable value' premises and owner directors. Guidance on furloughing is conflicting and the net value of furloughing low as most receive income from dividends. Many are campaigning for this to be looked at including Martin Lewis from Money Saving Expert who has recorded a video briefing on this and the Chambers across our region.

 

"As we head towards the opening of the HMRC portal for businesses to claim 80% of their furloughed workers salaries it is clear that there are several businesses struggling as they fall through the gaps of the government support. We have heard from businesses that have started up in the last year who can't claim self-employed allowance as they don't have a history of tax forms. Small businesses, that have been paying rates as part of their charges in serviced offices don't qualify for the small business grant of £10,000, even though they are exactly the type of business that would benefit and it could be the difference between survival and not.

 

 

Directors, who tend to pay themselves in dividends, if the business is doing well, will qualify for very little if they furlough and in fact if they furlough they can't work on the business anyway which would probably be its death knell. Many businesses would have liked to cut everybody's hours and provide a part of their services but have been forced to furlough whole weeks of people. More flexibility would definitely have contributed to a better result at the end of this crisis."

 

Louise Punter Surrey Chambers CEO

 

We want to hear from you

 

We want to hear your local business stories, whether that's the challenges you are currently facing, or solutions that you have implemented to adapt to COVID.

 

These stories will help us build a strong narrative on the current economic situation of our area, to be included in our weekly report to Government. We need as much up-to-date business intelligence as possible so please:

 

 

Jonathan Sharrock,

Chief Executive at Coast to Capital

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