As new measures continue to be announced by Government in regards to COVID-19 business support, Business Link speaks with Eddie Williams, Midlands Chair of insolvency and restructuring trade body R3 and a partner at Grant Thornton in the East Midlands, about the Coronavirus Business Interruption Scheme, the self-employed and how the virus has impacted his work. Eddie also gives his plea for responsible shopping.
Perhaps the main thing today (Monday 23 March) is the Coronavirus Business Interruption Scheme going live. It was announced on Friday that this would be interest free for 12 months, but how do you think taking a loan through this scheme will impact businesses in the long run?
I think it’s still relatively uncertain about what the long-term implications of this. I think quite rightly the focus has been on the immediacy of the situation and it has provided much needed liquidity to businesses in this unprecedented time of challenge. I think in the long run there are some more questions around the provision of support and repayment of that support that you would hope and expect can be worked through from a position of more stability on the other side of this current challenge.
One of the statements on the British Business Bank’s website in regard to the loans indicates that businesses should “have a borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty.” We might have some businesses wanting to apply who aren’t prepared in that way. What do you think of this aspect?
I think that that aspect of the provision of the facility is certainly an area which is going to get a lot more focus and a better level of understanding over the coming weeks and months. By making that statement, there is a view that for businesses that perhaps were struggling in some way, shape or form may not be able to automatically access this scheme.
A new poll quizzing decision-makers on Government’s response to the Covid-19 crisis showed 43% of respondents thought that banks should offer businesses ‘zero-interest’ loans to support them through the crisis. Do you think this is actually feasible?
I think interest on these loans is a part of the consideration. Obviously, the interest costs and nature of set up fees are an initial concern. However I have to say I think the focus is probably rightly much more around the overall quantum of the loans and repayment rather than the cost of borrowing or the interest associated with it. I think for businesses who are going to be taking out these loans (of which I’m sure there will be many many within UK plc), an understanding of how those loans are going to get repaid back over a period of time, alongside not just the interest costs but the overall repayment of capital is probably the biggest consideration.
What are your thoughts on the measures that have been announced so far? Do you see any particular areas that are lacking support or key decisions that deserve to be highlighted?
I think it’s a very fluid situation. Indeed I can’t recall a time where there has been as much fluidity as we are experiencing at this moment in time. I think that when there’s a degree of uncertainty, making bold decisions provides some level of comfort or assurance. Measures that have been put forward thus far appear to be at a level that has not been seen before and I think in particular the provision of support around employees towards the end of last week was an incredibly powerful statement to UK plc in terms of the support of Government over the coming weeks and months in response to this challenge. That was probably one of the most important statements to help provide an element of certainty in a highly uncertain, developing situation.
One group that it has been argued have been overlooked more is the self-employed, what do you think Government need to do to step up in that arena?
I think one of the initial responses was around the tax and self-assessment deadline being pushed back from early summer to early January. I think that’s helpful in some ways as a statement, but I do think that the area of the self-employed and their position in this situation is undoubtably going to get more focus over the coming days, with the view that support or an understanding of the support available will become a lot clearer. I do understand it’s a little more difficult to mechanically find an easy way to support the self-employed. With the private sector, there is an obvious mechanism there to provide business with the suitable provisions which allow them to be able to know that they can provide that level of support to their own employees. The very nature of self-employment means it is practically a little more challenging, but I’m sure Government are thinking about that. I am sure it’s very high on their agenda and priority list at this point in time.
If it has, how has COVID-19 impacted you and your work so far?
We’re getting a lot of queries from our clients. It’s a very challenging situation for them to be going through, and we’re trying to respond to those queries with information and insight as it develops. I think that it’s very early days in terms of our own workflows associated with this situation. Quite rightly the provision of support is mainly coming through Government, because they has the ability to provide wide ranging solutions to the whole of UK plc. I think as things calm down a little bit, and there’s increasing clarity, there’s going to be a lot more support from the restructuring community, to try and help navigate businesses and individuals through a very difficult situation. I suspect that some of the challenges might well appear after the current period, where there is the consideration of how you pay loans or deferred HMRC payments back for example. There’s going to be some interesting challenges. As you can imagine we are very busy with workflows and enquiries but having said that it is a bit of an unusual situation in terms of exactly the guidance that anybody can give in these very fluid times.
Is there anything you would like to add?
One thing I do think is quite important in this is the topic of food. I would say that there appears to be no indications that there’s any challenges in the food supply chain. It’s really gratifying to see the way in which food retailers and the food supply chain is stepping up in difficult times but, underlying that, you really hope that people are acting appropriately and responsibly with regard to their food requirements. There doesn’t appear to be a significant underlying challenge there unless we create an additional unnecessary challenge when we don’t really need to. That would be my one plea.
You ask at the supermarket staff how things are going and it’s odd when people say, “We have warehouses absolutely full of food, the challenge is merely getting it to the shelves because it’s moving off them too quickly.” There is no underlying food shortage unless we as a society create one. It is certainly within our gift not to add to the challenges.