Covid and Small Business Finance

COVID AND BUSINESS FINANCE FOR SMALL BUSINESS

The World has been grappling through the unprecedented political, economic and social disruption caused by the Coronavirus pandemic. The economic turmoil has had a significant impact on the small businesses in the UK. We know that SMEs are the lifeblood of the UK economy as it accounts for more than 50% of total revenue generated by the UK businesses and employs more than 45% of the labour force. A survey conducted by Goldman Sachs in August 2020 showed that nearly two thirds of the small businesses recorded a decrease in the revenue and 44% have had to cut their jobs. The adverse situation was somehow ameliorated by the £30billion covid 19 stimulus package launched by the UK Government in July 2020. This included Bounce back loans for the businesses,kickstart scheme and job retention bonus to safeguard jobs and schemes to boost infrastructure spending as well as stamp duty waiver for the housing industry. This somehow steadied the ship and helped many small businesses from going bankrupt. Apart from the grant, the bounce back loans are repayable after 12 months. So it is upto the businesses to make effective utilization of the loan amount upto £50,000 made available to the business registered before February 2020. One of the best effective ways of utilizing the money is to invest in the current business, make up for the working capital requirements and boost the revenue. Some businesses like the retail shops do have a saturation for utilizing the entire money for piling up the stocks and providing for the cost. For such businesses it is advisable that they explore other business avenues which can generate better returns for their investment. They must either make better utilization of the money or else have to remit it back to the loan account. Now money is scarce and it’s most effective utilization is sought after for providing the necessary impetus to the economy. One of the main resilience of the UK economy has been due to the backing of the government by increased public spending. This is evident from the Goldman sach survey which shows that more than 80% of small businesses say they are happy with current funding and need no additional funds. Though there have been few political noises on the need for more funds. It is surprising to see that the survey shows 67% of businesses have availed external finance. This shows many of the entrepreneurs see an opportunity in this crisis and are trying to make the optimum use of it. They have already seen the light at the end of the tunnel and this confidence helps them progress audaciously. These tough times test the mental strength of many entrepreneurs and only courageous and optimistic ones come out successful.