AS the business community becomes daily more familiar with the coronavirus economic support system the practical challenges become more obvious.
The timetable for cash distribution remains desperately urgent with local authority business grants of £10,000 to small business and £25,000 to hospitality, leisure and retail sectors the earliest we have seen reaching bank accounts.
We are still hearing complaints about the different approaches being adopted by the Scottish and UK Governments in deciding eligibility for the £25,000 grants.
In Scotland companies are eligible for one grant only whilst elsewhere in the UK companies can receive a grant for each eligible property.
The Scottish Government’s defence that there are many more SMEs in Scotland eligible for the small business grant doesn’t persuade those businesses losing out on the hospitality, leisure and retail sector support - not least since these are amongst the most badly affected sectors.
The impression that companies losing out are all big firms is wrong. We are hearing from a steady stream of smaller companies with more than one property for whom these grants could be the difference between survival and failure.
Even more concerning is the pace at which the Coronavirus Business Loans Scheme is being rolled out. As I write, only 5,000 companies across the UK have received support despite nearly a fifth of companies reporting in a British Chambers of Commerce survey that they have no more than a month’s cash left.
The scheme expects banks to assess whether companies are good and viable businesses and the viability tests appear to be largely the same as banks were using before the crisis began.
I hope by the time this article appears the Chancellor will have agreed with the banks how lower viability thresholds can be applied, perhaps by expanding the Government Loan Guarantee from 80% to between 90 and 100%.
Perhaps the least surprising result of the BCC’s most recent survey report was the scale of the take up of the Job Retention Scheme. Almost three quarters of companies said they were planning to use the scheme, with nearly four out of 10 planning to furlough more than 75% of their staff. That squares with the feedback we are hearing from Glasgow Chamber members and demonstrates the enormous scale of the economic impact this crisis is having.
For those furloughing nearly all staff the pressure on HMRC to get the cash distributed is intense.
These are the companies whose revenues will have all but dried up and are desperately hoping the May deadline for payments can be advanced as far as possible. Cash flows are the most urgent matter and will be for the next three weeks.
Nevertheless the Chamber is also turning its mind to the future and actions we need to consider as we try to move from crisis into recovery. For example, it may be that the Job Retention Scheme will have to run far longer than the Chancellor may originally have intended.
In sectors like hospitality, retail, aviation and tourism the re-emergence of demand may be tentative and stuttering and if the furlough wage support is ended too abruptly job losses may surge.
The Chamber has established a Glasgow Business Resilience Council bringing together many of our most active members to recommend actions for a smooth and swift recovery in business life once an end to the crisis is in sight.
Much damage will have been done to customer confidence, to company balance sheets and to economic assets like our education and transport systems.
But the faster we get cash into bank accounts the more the damage will be limited.
Stuart Patrick is the chief executive of Glasgow Chamber of Commerce
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