Businesses are still struggling to secure support from government-backed rescue packages, according to the Institute of Directors ahead of a government stimulus package expected next month to kick-start the UK economy.
In a letter to business secretary Alok Sharma, IoD boss Jonathan Geldart said that a fifth of its members had not received any government help during the pandemic.
“Support for these firms in particular is urgently needed,” he said in the letter, “to assist the swift reopening of the economy.”
Lenders have provided £38.2bn through the three major government-backed lending programmes — an increase of £3.3bn in the past week alone. The majority of this has been through the bounce bank loan scheme, which provides finance to the smallest firms, but companies are still concerned about getting access to the larger coronavirus business interruption loan facility.
Some businesses have been unable to obtain loans because of ineligibility — such as falling foul of the undertakings in difficulty rules that prevent lending to companies with historic losses on their balance sheets.
But the IoD also said many members are company owner-directors who receive their income through dividends, which falls outside existing eligibility criteria, while others do not qualify for business rates reliefs or the previous grant scheme because they do not own their premises.
The IoD said that the economy had “been kept on life support through the government’s support package” but that additional support was needed for businesses to restart operations.
“This means prioritising those who have missed out so far and providing a cash injection to bolster firms operating under ongoing restrictions,” the letter from Mr Geldart to Mr Sharma said.
The IoD warning comes just days after MPs on parliament’s Treasury committee found that more than 1m people have been stopped from accessing the government coronavirus support schemes. It pointed to a range of reasons, from directors paid through dividends to those missing out on support because they started new jobs after the cut-off date for qualifying.
The IoD also said that more than half of its members expected the debt their organisation had been forced to take on during the crisis to undermine their recovery and investment plans — and urged the government to consider expanding a £617m discretionary grant fund set up to help businesses.
Many local authorities have also said the pot is not enough to cover all eligible companies. Bristol said it would need around four times its allocation, for example, and called for the government to recycle £600m from the likely underspend of its £12.3bn business grant fund.
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Under the grant scheme, businesses operating out of premises that have a rateable value — a measure of the rental value of the property — up to a maximum of £15,000 can get a £10,000 payout. Companies in the retail, leisure and hospitality sectors with a rateable value of between £15,000 and £51,000 can receive £25,000.
Some businesses left without support have formed a campaign group called Forgotten Ltd. Jayne Moore, who owns Moore Media in Liverpool, a firm that employs seven people, joined after failing to get support as she pays herself in dividends.
“We are creating jobs, we are here trying to survive through this lockdown and our businesses are being decimated. It is not good enough. Help company directors,” she said.