KJG Corporate Finance Partner, Steven Lindsay has identified that Greater Manchester businesses are missing out on extra grant support, whilst several other areas in the UK have announced top-up grant schemes for their local businesses.
He explains: “As part of our membership of The Corporate Finance Network across the UK, we had been asked to contribute to an exercise where we identified those businesses which have missed out on most of the various support solutions announced by central Government, and this has been passed onto the Ministry for Housing, Communities and Local Government (MHCLG) and BEIS Cities and Local Growth Unit. We identified a number of businesses who were not eligible for one of the support schemes for some reason, often due to unfortunate timing or a commercial decision which was made before the onset of the pandemic. These broadly fit into ten groups and these will include thousands of our own local businesses.
- Those businesses who need to continue with some business, so cannot furlough, but trade is massively diminished
- Newly incorporated businesses who haven’t met the CJRS furlough deadline to HMRC in March, but have missed the SEISS too, often including many contractors who resigned from their own company on 28th February and joined an umbrella company, but then their contract has since been cancelled
- Limited company directors who are on annual schemes for PAYE are generally not able to furlough themselves as miss 19/3/20 deadline
- Ltd company directors earning by way of dividends as this is excluded from either the SEISS or CJRS scheme
- Retail/hospitality/leisure premises which are >£51k RV or who can’t access the Small Business Rate Relief because they have more than one rateable unit
- Landlords’ businesses (residential or commercial)
- Day nurseries and mixed dental practices who thought they could furlough all workers but who have since been restricted due to Government announcing that they had to exclude that part of the business which received some public funding
- Partners, such as those in professional practices like solicitors and architects who earn > £50,001 and as such are excluded from the SEISS and not eligible for the CJRS furlough scheme
- Loss-making or less profitable businesses in 2019 who aren’t being accepted for CBILS loans (and likely won’t for BBLs too)
- Offices in shared workspaces, businesses who have just moved into new premises and were awaiting a rating valuation or revaluation, those whose rate account was in the directors personal name rather than the companies, or where there was an error on the rate account
However, he also noticed that other areas of the UK were already receiving top-up grants to fill some of these gaps, but that our region hadn’t provided a similar response for the businesses in our area.
Scottish Enterprise and Business Wales have announced additional grant schemes, as have two LEPs in the South-East. Five areas of England have agreed to match any funding raised on the crowdfunding site, Crowdfunder. But Greater Manchester LEP have only announced further support by contributing to the existing CBILS lending scheme which does not address the above issues.
LEPs or Local Enterprise Partnerships are voluntary partnerships between local authorities and businesses, set up in 2011 by Government to help determine local economic priorities and lead economic growth and job creation within the local area, giving some flexibility and control to each local area.
He continued “I accept that most LEP funds are based on supporting growth and therefore in normal times companies need to be willing to spend on capital assets or new employees before they can access some matched funding from their grants. However, to leave these local businesses exposed by not supporting their working capital needs now, seems to be short-sighted. Those firms which do survive this period will most likely be laden with debt due to deferred payments and other emergency loans they have taken out, and few will be in a position to take advantage of the LEPs typical grant offering then.
“I find it surprising that there is such a disparity around the country and that businesses in Greater Manchester are particularly missing out. I would call on the Greater Manchester LEP to urgently launch an Economic Resilience Fund to plug some of these gaps for local businesses, so that we can protect the existing trade and jobs they provide. They may not all be exciting, high flying and fast growth businesses, but there are many small, solid and steady businesses in our towns who have contributed to our region for years and these need to be protected”
Local Case Study
Food and beverage providers are a prime example of an industry hugely affected by leisure and office closures. We know of clients that have been talking to banks about funding but have been asked for 4 year forecasts, despite the Government now saying there is no requirement for forecasts showing future beyond the covid-19 period.
Struggling Businesses
The chancellor did state when announcing the measures that not all businesses would be able to be saved in these challenging times, with that in mind it’s worth all businesses considering their options should they be unable to obtain funding.
Alan Fallows, head of corporate recovery at Kay Johnson Gee commented:
“Given the current pandemic, businesses struggling to obtain funding need to be prepared for the worst, although this doesn’t mean the end. There are plenty of ways to rescue a business from the point of collapse, I encourage business owners to take action earlier rather than later as there is a fine line between being able to, and not being able to put rescue measures in place.”
Learn more about our Corporate Recovery services here, or call them on 0161 832 6221.
