Tide UK has ‘just weeks’ to urgently reform SME aid and save businesses

• Grants and loan schemes must be simplified and delivered more quickly

• Delivery dates of HMRC schemes must be brought forward

• CBILS must be opened to all lenders immediately 

 The UK Government must take urgent action to ensure the effective implementation of its SMEs support schemes, research from Tide has revealed today.

Tide, the business banking platform with more than 150,000 SME members, has conducted analysis of internal and public data, revealing that no government scheme has, as yet, led to meaningful volumes of funding being put in the hands of small businesses. There is therefore a serious concern that small businesses will start to fail at scale within weeks unless urgent corrective action is implemented. The priority actions should be:

Priority 1.  to simplify the grants and potentially accelerate delivery by making them available through SMEs’ current account providers

Priority 2.  to follow through on the announced opening up to all lenders of the Coronavirus Business Interruption Loan Scheme (CBILS) immediately

Priority 3.  to bring forward the delivery dates of the HMRC driven Job Retention and Self-Employment Income Support schemes

Daily information should be published by the government showing the number of cash-releases per scheme to provide transparency of impact.”

Sectors are most at-risk

Sectors directly impacted first by initial government guidance. These primarily include travel, events and hospitality. SMEs in these sectors are facing an almost complete erosion of income. Few of these businesses will be able to compensate through digital or remote delivery, such as take-away.

The staged implementation of the lockdown has resulted in the full impact not yet being visible. Payment trends on the Tide platform show an accelerating deterioration over the last 10 days that is expected to continue.  The cash reserves for these businesses are likely to last only 4-8 more weeks without government action.

Other sectors directly impacted after the announcement of lockdown. The government’s announcement of the closure of non-essential retail will lead to similar dynamics as those to be impacted first, with a delay of about two weeks.

Sector spill over.  Based on analysis of the sectors directly affected by the lockdown, Tide estimates that at least 30% of small businesses are directly affected by the lockdown.  While there are some winners (especially in the digital distribution space and food retail), there is a significant risk of a knock-on impact for other sectors. This arises with sectors such as travel and hospitality being no longer able – or for cash preservation choosing – not to pay their business partners (suppliers, landlords, professional advisors e.g. accountants).  The first spillover effects are already being reported and an acceleration is likely unless government aid starts reaching small business.

Impact to date of the main SME Business Support schemes

Grants: in danger of not delivering.

Tide has received feedback that many local authorities are struggling with the implementation of the £10,000/£25,000 grant schemes.  At best, it appears that local authorities will be able to start processing these at scale in a few weeks’ time.

Based on a straw pool of c30 members (on 27 March 2020), the complexity of the schemes (including differences across the UK nations) are not understood by most small businesses.  No business we spoke to had actually received grant funds or had been contacted by their local authority. Grants are essential as they provide immediate relief, avoiding spillover effects between business sectors.

Tide recommends that the grants are changed and made universally available through financial institutions.

Coronavirus Business Interruption Loan Scheme (CBILS): in danger of not delivering. 

The CBILS is on the path to failing to realise its full potential.  The scheme is available through too few lenders and the scheme itself is not fit for purpose during this crisis.  One third of the most vulnerable small businesses are unlikely to be reached by the limited number of traditional lenders.

Urgent action is required by the government to immediately reform the scheme and ensure that the British Business Bank (BBB) is appropriately staffed and guided to ensure fast delivery.

The BBB has indicated that it is opening up to new lenders, but at the time of writing Tide received only a holding message (despite expressing interest almost two weeks ago) and a request to complete a further form. The government must provide emergency access to new lenders.

Job Retention scheme: not yet live

This scheme is highly welcomed by SMEs with employees.  The scheme is not yet operational.

Assessment of Self Employed Income Support Scheme: not yet live

The scheme is not yet operational.

Oliver Prill, CEO of Tide, added: “The Chancellor’s interventions to help SMEs, the backbone of the UK economy, is much welcomed by Tide and our members. However, based on my assessment of the support packages, the government needs to urgently make reforms and amendments to the current schemes so they are delivered to SMEs in good time. The social and economic consequences of failing to do this could be dire, with thousands of businesses facing bankruptcy and their employees being made redundant. We are also calling for more transparency from the government, urging them to publish daily data on the number of cash-releases per-scheme.” 

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