The government has announced that the UK lockdown will continue for at least three more weeks, with all current restrictions extended until early May. This means people will only be able to leave their homes for essentials and many businesses will need to remain closed. The extended measures followed the announcement that 13,729 people have sadly died within the UK from coronavirus. As the outbreak impacts the whole country, we take a look at the latest business developments.
UK will refuse calls for an extension of Brexit transition period
The Brexit transition period is due to end on 31st December, although there have been calls for this date to be extended. The transition period is designed to allow both the UK and the EU to negotiate a trade deal, however due to the coronavirus outbreak discussions have stalled.
Despite the delay in negotiations, David Frost, the UK’s chief negotiator, has announced that the UK will refuse any potential extension. Mr Frost explained how the government believes that the UK requires more flexibility to tackle the coronavirus outbreak, so does not want the country to be bound by EU regulations for longer than necessary.
Retail sector experiences worst decline on record
The retail sector has recorded its worst month on record, with sales falling by 4.3% compared to the 2019. Although supermarkets have experienced an unprecedented boost, the British Retail Consortium (BRC) has described how this is a sharp contrast to many other businesses. Although, with people looking for entertainment during lockdown, computers, fitness equipment and game sales have also spiked.
The divide between online and physical shopping is drastic and the BRC have warned that many companies and their employees are at risk. The latest high street chains to announce closures are Oasis and Warehouse, which have both fallen into administration. With non-essential retail stores forced to close, many stores have gone into complete hibernation.
Loan Scheme for large businesses is expanded
The final details of the Coronavirus Large Business Interruption Loan Scheme (BLBILS) have been announced. There is government-backed financial support available to businesses with a turnover of more than £45 million, with those turning over more than £250 million eligible to borrow up to £50 million. The scheme is designed to run alongside existing schemes such as the Coronavirus Business Interruption Loan Scheme and the Covid Corporate Financing Facility.
The latest details have confirmed that businesses with a turnover of more than £500 million will also be eligible. The aim is to ensure that all viable businesses receive the financial support they need and is in addition to other forms of government support such as cash grants, government backed loans, wage subsidies and rate relief.
Processing delays for the Coronavirus Business Interruption Loan Scheme
According to government figures, banks and financial institutions have lent more than £1.1 billion to small and medium sized businesses, through the Coronavirus Business Interruption Loan Scheme. This equates to just over 6,000 loans, with an average amount of £185,000 borrowed. However, many businesses are reporting that the loans are not being processed quickly and urgent reforms are needed.
Despite more than £1 billion being lent to businesses, the British Chamber of Commerce (BCC) has reported that only 2% of UK businesses have been able to secure loans. The shadow business secretary, Ed Miliband, has urged the government to guarantee 100% of the small business loans, a move in line with many other countries.
Although businesses have been offered wage subsidies to cover 80% of employee wages, rates relief and cash grants, the lack of lending is causing significant disruption. According to the BCC, 16% of businesses only have enough cash to last a month, with 36% only able to survive for 3 months.
If your business is struggling to access financial support, we can help you compare the best deals from a variety of traditional and alternative lenders. As a broker, we can help you compare everything from business loans to overdrafts, so your business can find the cash and breathing space it needs. To find out more, please contact us today.