CoronaVirus - the costs to businesses case studies. Briggs Shoes, Morecambe
Covid 19 has resulted in an extended closure for the first time since great Grandfather Briggs first opened in December 1863. As a family owned and operated retail SME employing 12 staff we find ourselves in uncharted waters.
I say uncharted because this time we have been promised an unprecedented package of financial support by Government. By contrast in the aftermath of similar financial crises in 1997 & 2008, there was no Government assistance. Banks, who caused the last crisis became at best indifferent even hostile towards their previously cherished customers.
Retailers have been lobbying for business rates reform for years in order to compete on a more level playing field with the internet giants who give little or nothing to local economies. The 100% relief is welcome, however, why this does not extend to all high street retailers is beyond me. The large chains have suffered in line with independents and also need help to compete.
The next cost cutting exercise a retailer would undertake would be to lay off staff. The Chancellors announcement to support 80% of the cost of keeping often time served, experienced and valuable team members is also innovative and welcome.
Grants provided by local Government are also much needed and very welcome. I submitted an application 6 days ago and am yet to receive an acknowledgement.
The biggest raft of measures is to provide 80% Government backed, initially interest free loans and overdrafts to businesses, providing working capital which in turn greases the wheels of the supply chain. This scheme basically replaces the EFG system. My concern here is that this funding is to be provided by “delivery partners” including banks and finance houses.
I have used my bank for the last 7 years and never borrowed a penny. They see a regular 7 figure turnover moving through the account year after year. Twice, when expansion opportunities meeting the EFG criteria have come along we have gone to the bank to be turned down flat. We have been told candidly that the bank is “not interested in loans under £500K” and “the bank does not have the appetite” for the retail sector”.
So, as a retail SME looking to borrow up to £140K on a short term basis I anticipate a long and fruitless search for the “right” funding partner who will be offering Government backed finance without punitive rates. Unless there is significant downward pressure upon banks to actually get cash to businesses it will simply become as QE was after the last recession. A cash cow for financial institutions who don’t need it at the expense of those of us who do.
I await the outcome of my finance application with interest