In a report by The Federation of Small Businesses, it has been found that a million SMEs and sole traders have been overlooked in terms of Covid emergency support and are now in urgent need of help, with one in five reported to have received no financial support from the government since the onset of the pandemic.
Without additional support from the Government to aid well beyond the crises and into the recovery phase, the challenges could consume those businesses who are unstable prior to the advent of the virus. What has been resilient throughout is the nation’s entrepreneurial spirit, with this being the primary factor to ensure that the private sector doesn’t falter. UK SMEs have shown strength and have adapted quickly to the pandemic and the changes it has ushered in, with a 12% increase in new businesses starting up during 2020.
Making growth investment more easily available to small businesses that are looking to scale should be a priority. The last time that the Government-backed EIS was extended, it resulted in a significant jump in private investment into small businesses. Replicating this effect with new, or increased, incentives would provide a much needed boost to a section of the economy that is most in need. LUKE DAVIS, CEO of IW Capital, discusses how scale up finance was key prior to pandemic, and why now it is of critical importance for recovering businesses.
“More practical support needs to be offered to small businesses, too many have been overlooked and we are now seeing the shortcomings of the government’s Covid relief strategy. What we need to see happen in March, is the Enterprise Investment Scheme advanced to include the hospitality sector, which will help raise money into the businesses that need it. Hospitality used to qualify for investment under the Enterprise Investment Scheme, but unfortunately this was scrapped. If EIS is extended to hospitality, we would see a huge increase of investment and private equity into the sector, meaning businesses wouldn’t have to take on more debt to survive, giving them a much larger chance of success in the future.
“UK businesses have shown true resilience throughout the pandemic and we have even seen the emergence of new start-ups, which is sure to create some exciting investment opportunities and will play a key role in the nation’s recovery.
“People want to get out and spend, businesses want to grow and investors want to help them do that, it’s a perfect storm for rapid growth. Pubs will bounce back along with restaurants and other hospitality, no one will want to stay at home after the year we’ve had and I really believe that. Working with local residents on redeveloping the pub and hospitality venue Rockwater Hove has shown me how much people want, more than ever, a place to come together as a community.
“The SME community make up 99.9% of private sector businesses, and so supporting them to ensure their financial growth, is of the utmost importance to the overall health of the UK economy. Small firms already employ over 16million people in the UK, and pre-pandemic, this sector was growing at a faster rate than the overall job market. A return to this would provide a welcome boost.”