30 Jun Small business grant fund: a knee-jerk Covid-19 support measure?
Over the last couple of months, I’ve been flat out providing support to our existing clients and also putting out as much helpful content as I possibly can to the wider community. This has been no small feat given the sheer volume of unprecedented support measures introduced by the Government in this time.
I could reel off a list of all of these but I’m sure you’ll just switch off and mutter something along the lines of ‘bore off mate!’
But you will undoubtedly have seen daily releases of new initiatives: some relevant and some not. Business is not one size fits all so there have been many, many groups and areas that the Government has needed to consider and specify policy for – I would not want to have their job. It’s probably no wonder then that some of the initiatives appear well thought through, while some of them seem a little more ‘knee jerk’. (Don’t worry, not channeling Robert Peston here, read on, worry not…)
Being in the trenches, I have seen it first-hand the levels of grants awarded to companies. Grants are non repayable don’t forget… ‘free cash’ for want of a better phrase. The majority of small clients have received a £10k grant for being on the rates register. Some definitely needed it, I am not denying that. However, as controversial as it sounds, I would say that a lot don’t…
I have clients who are currently experiencing their healthiest cashflow ever. They did not apply for it and yet here they have £10k arrived in their bank from the small business grant fund. That said, this pandemic is far from over, and having the ‘safety net’ in the bank could mean the difference between keeping all employees on their books for long-term survival and helping with business readiness when this is all over. For companies who haven’t yet needed to dip into it, my advice has been to really think about how it could make their business more resilient, should we find ourselves in this semi-locked down world for the next year or so…
I guess my point is, that when you consider how many of these grants have been given out, this is not an insignificant amount of amount of cash. The average person in the UK (according to a quick google) earns £29k which would mean tax of about £5k per annum… in effect Mr or Mrs Average will be working for 2 years to repay each grant… so the economic impact will indeed be felt for years to come.
My question is whether the grant should have been applied for?
Indeed, most of the other support has been on an application basis, whereby you have to demonstrate that you have suffered as a result of the current situation. This is logical in anyone’s mind. And the correct approach… Probably?
That said, I applaud the decision that ensured the delivery of the grant to stop small businesses from going under in those first critical months – and not making them wait until the administration processes were in place to apply for a lifeline in unprecedented waters.
The key takeaway for me, and my clients, is that if their business didn’t need this grant right now, I’ve challenged them to really think about how they can use the gift to make their business more resilient. Is it time to invest in new technologies, or processes, or people? Or do they forecast more troubled times ahead when they may need to dip into the pot created by the grant? Understanding and predicting cash flow through your business is more important now, than ever.
And for more on that subject, check out one of my previous blogs on cash targets.