Survey lays bare impact of coronavirus pandemic

News Posted 14/05/20
One in three closed small firms fear they’ll never reopen amid widespread redundancy plans.

FSB’s recent survey of 5,471 small business owners finds that four in ten (41%) have been forced to close since the beginning of the coronavirus outbreak in the UK. Of those that have closed, 35% are not sure whether they will ever reopen again.

For those small businesses paying a mortgage or lease on their premises, over a quarter (28%) have failed to make, or faced severe difficulties in making, rent or mortgage repayments as a result of the pandemic’s economic impacts. A similar proportion (25%) have had to shelve product development plans. Among exporters, a fifth (21%) say they have had to either reduce or cancel international sales.

In response to the strain being placed on them, more than one in three (37%) small employers are considering, or have already made, redundancies.

Seven in ten (71%) small employers have furloughed staff to aid the survival of their business, illustrating the extent to which the Job Retention Scheme has protected the livelihoods of millions as economic activity has slumped.

As initial efforts are made to switch the economy back on, three quarters (74%) of these businesses say the ability to partially furlough workers would benefit them. Of these, half (50%) say they want to bring staff back gradually, and one in three (31%) say it would keep their business viable.

FSB National Chairman Mike Cherry said: “The impact of the coronavirus pandemic has been felt right across the small business community, with thousands of small firms all over the UK fearing for their futures. The Government has stepped-up with a huge range of support for millions of small businesses and sole traders, from income support schemes, to cash grants, to help with accessing finance and business rates breaks.

“Policymakers now need to realise that the economy will not go from zero to a hundred overnight once we’re into the recovery phase. The crucial support that’s on offer needs to be kept under review, and adapted to reflect the new normal as we chart a course back to economic recovery.

The new study also highlights those within the small business and self-employed community that have struggled to access government-initiated support.

Among small firms that pay business rates, close to one in seven (15%) say their landlord charges them for rent and business rates in a single recurring bill, meaning they risk missing out on cash grants linked to the payment of rates. The Government has now launched a discretionary fund aimed at helping those faced with this situation, though the vast majority (81%) do not know what share of their single charge is accounted for by rates, making it difficult for them to establish what, if anything, they might be due.

Close to one in ten (8%) business owners have applied for universal credit, with close to a third (29%) having their applications rejected. Even amongst those that have had applications approved, less than one in seven (13%) have received their advanced payment.

Meanwhile, of those small business owners that say they are not using the Self-Employed Income Support Scheme, the majority (68%) say this is because they are directors of limited companies. FSB continues to make the case for support for those excluded from existing grant schemes, including by calling for increased access to improved local hardship funds.

David Milham, Regional Chair for the South East, added: “The support measures are helping the vast majority, but not absolutely everyone. We’re hearing from business owners who are falling through the gaps and taking their stories straight to the top of government. Policymakers need to be in listening mode and prepared to help the most vulnerable over the challenging months ahead. South East members contributed to this survey and when compared to the national picture we see that our members in Kent are struggling just as hard as businesses across the UK. It is important to rebuild our communities - a great way to do that is to support the small businesses at the heart of them.”

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