Experts call for significant changes to government coronavirus support for SMEs

germ graph
  • Leading accounting firms, including Saffery Champness, have emphasised the importance of Coronavirus support schemes.
  • A key issue for SMEs is ensuring cash is provided quickly.
  • Respondents call for more assistance to take the form of grants rather than loans.

Senior experts from a number of the UK’s largest accounting firms have welcomed the Chancellor’s Bounce Back Loans Scheme, providing 100% government guarantees on loans up to £50,000 for small businesses. The scheme is a step towards resolving the major concern that cash is not reaching the hands of SMEs quickly enough to meet their pressing needs in the current crisis. The firms, which have deep expertise in advising SMEs of all sizes across the UK, also consider that there should be a stronger focus on grants rather than loans or payment deferrals.

A spokesman said: “Given the importance of SMEs in revitalising the economy it is critical that we review the operation of the various schemes on an ongoing basis. Getting cash to SMEs promptly is one of the key measures of success. We must get the right help to them now and to ensure that we are not just kicking the problem down the road for a repayments crisis early next year. This may also require a rebalancing of loans and payment deferrals in favour of some more grants.”

In a survey administered between 16 and 20 April, senior experts found that the Coronavirus Job Retention Scheme (CJRS) was the most important and effective scheme in terms of providing help to SMEs. Despite recent changes to the schemes, the Coronavirus Business/Large Business Interruption Loan Schemes are still seen as the most problematic measures. The VAT Deferral Scheme is very welcome in providing immediate cash relief though there are worries it will lead to cash flow problems when the deferred payments become due in 2021.

The spokesman added: “It is crucial to help micro and small businesses but we must also ensure the ‘Ms’ in ‘SMEs’ are not forgotten. These companies play a key role in regional economies and are major employers. We need to ensure schemes meet their needs as well. Providing tailored short-term support to SMEs of all shapes and sizes is essential to helping them achieve their full long-term potential”.

Other key findings include:

Call for 100% government backing of Coronavirus Business/Large Business Interruption Loan Schemes 
Most survey respondents believe the loans should be 100% guaranteed by government rather than 80% as at present. There is still felt to be a lack of clarity regarding the information required by the banks, with inconsistencies in how the different banks are operating the schemes and with the approval process being too slow and uncertain. 

Concern on how furloughed employee directors are being treated
There is strong support for the CJRS and furloughing, but there are significant concerns relating to how employee directors are being treated. Specifically, there are questions around basing their income on salary and excluding dividends, and around the extent of directors’ duties they can perform while furloughed. 

Read the full report here

Loading