Budget: SMEs given support in the face of Covid-19

The chancellor has used his first Budget to outline plans to support small to medium-sized enterprises (SMEs) that could be affected by Covid-19.

Not only are SMEs the main customer base for the channel, but a lot of resellers also fall into that category.

The coronavirus has already wiped billions off the value of shares, hitting those public channel firms – and as the number of those suffering from the virus increases, there are concerns that thousands of firms could suffer a drop in orders and have to deal with staffing issues.

The Chancellor of the Exchequer, Rishi Sunak, said that the coronavirus would “have a significant impact on our economy”, but added that it would be temporary and that the government is taking steps to protect businesses.

In the first section of his speech, Sunak addressed the concerns around Covid-19 directly and outlined plans to support individuals and businesses over the duration of the virus.

Efforts were made to support the self-employed and those working in the gig economy, with an offer to quicker access to benefits should they be unable to work.

For businesses with fewer than 250 employees, there was also a commitment to refund sick pay to take the burden of paying for unwell staff off the shoulders of employers.

“This will significantly reduce the burden on businesses,” said Sunak, adding that were also plans to defer tax payments for those struggling to fill in the paper work, and rates shelved this year for shop-front dealers with a rateable value of less than £51,000.

The hope is that the coronavirus will last for only a few months, and if businesses are supported then there will be an opportunity to bounce back from the problems quickly.

Sunak introduced a temporary coronavirus interruption loan scheme which gives small firms a chance to access up to £1.2m from banks, with 80% of that guaranteed by the government, to help businesses facing cash flow problems.

“The government will offer a generous guarantee on those loans, covering up to 80% of losses, with no fees, so that banks can lend with confidence,” he added. “This will unlock up to £1bn of attractive working capital loans to support small businesses, with more as needed.”

On 11 March, the Bank of England cut interest rates and introduced an SME funding scheme to also encourage banks to lend to smaller firms.

“Together, we are taking action that is coordinated,” Sunak said. “Our responses have been carefully designed to be complementary and to have maximum impact, consistent with our independent responsibilities. The government’s response will use fiscal action to support public services, households and business.”

He also talked in the Budget of unleashing the power of businesses, adding that the government would be providing funds to help startups and would be supporting growth hubs to spread prosperity around the country.

There was also a segment of the speech dedicated to talking up the history of innovation in technology in the UK, with Sunak aimed at “recapturing that spirit” by increasing investment in research and development (R&D) to £22bn a year.

“Taken together, the extraordinary measures I have set out today represent £7bn to support the self-employed, businesses and vulnerable people,” said Sunak. “That means I am announcing today, in total, a £30bn fiscal stimulus to support British people, British jobs and British businesses through this moment.”