Falling through the CORONA CRACKS
Billions were pledged to help Billions the were pledged to sellf-employed and small businesses survive the crisis. But red tape and a lack of humanity mean too many deserving cases are still . . .
THE COUNTRY has now been in lockdown for a month and the Government has tabled an unprecedented support package for businesses, worth hundreds of billions of pounds.
But some workers are still worried they will lose their jobs and business owners are still fearing collapse.
Today, Money Mail shines a spotlight on the cracks where the Government’s money isn’t going. We can reveal that:
FIRMS are still unable to get vital government loans. One company that vets workers for the NHS now has a backlog of 5,000 staff because it doesn’t meet the criteria.
SElF-EMplOYEd business owners are not qualifying for help because they do not have the paperwork or pay themselves in dividends.
WORkERS in new jobs have been left with no income because they do not qualify for furlough cash.
NEW businesses have been denied support because they do not have enough money in the bank.
It comes as the Treasury opened its Job Retention Scheme fund on Monday morning and more than 144,000 employers submitted claims for more than one million staff in the first day.
last week, figures released by Uk Finance revealed that just 2.6 pc of Coronavirus Business Interruption loan Scheme (CBIlS) applications had been successful — accounting for just £8.7 billion of the £330 billion promised by Chancellor Rishi Sunak.
The banking trade body figures showed that just 6,020 loans had been agreed last Tuesday, from 300,000 initial enquiries and 28,460 submitted applications.
Andrew Goodacre, chief executive of the British Independent Retailers Association, says around 30 pc of his trade body’s 4,000 members may not be able to reopen after the outbreak. He adds: ‘There is a concern that coronavirus will accelerate the perceived decline of the High Street.’
But the Government has closed some of the cracks. A total of £1.25 billion was put aside at the weekend to support start-up businesses which were not eligible for existing coronavirus support schemes.
And £10,000 and £25,000 grants for small retail, leisure and hospital businesses are beginning to land in bank accounts.
But some companies and individuals are still set to miss out because they do not quite fit the criteria for financial help. NHS STAFF CONFUSION THE NHS is being starved of front-line staff because a firm that checks workers’ qualifications is not getting the support it needs from the Government.
Medic Check runs background checks on everyone from volunteers to surgeons starting work for the NHS, as well as providing a similar service for nursing homes.
John Burke, 63, who helps run the business, says it has a backlog of around 5,000 applications because the company can’t get a loan, which in turn is delaying getting frontline staff to vital health services.
Medic Check is one of thousands of companies struggling to claim state aid under the government-backed Coronavirus Business Interruption loan Scheme (CBIlS).
The loans are provided by High Street banks and the Government will take on 80 pc of any losses. But because banks still have to bear 20 pc of the risk, they have been asking for detailed financial information and forecasts which firms are unable to provide at speed.
John says Medic Check first contacted Barclays about getting a loan about a month ago. After a brief phone call, the company received an email on April 11 stating that the bank did not believe it was eligible.
The firm has been asked to provide a full year’s accounts, which John says he can’t do because it was only set up in September last year. It has also been asked to provide a forecast for the next 12 months, which John says is impossible because he cannot know how the business will be affected by the pandemic.
Nor does he think the business is eligible for new support measures for start-ups because it has not raised £250,000 privately in the past five years. He says the firm desperately needs the cash to buy hightech scanners for staff who are working from home. ‘If we can’t check the staff, then people aren’t going to take them on,’ he adds.
Barclays says it has yet to receive an official loan application from Medic Check but is ‘happy to review and assist’ their request.
A spokesman adds: ‘We are processing very significant volumes of CBIlS loans and we are doing everything we can to get money to thousands of businesses as quickly as possible under the scheme.’
BANKS’ BRUSH-OFF
NEW-BUSINESS owners also believe they may be at a disadvantage when applying for CBIlS loans.
Amy Bracher, 31, applied for a £50,000 loan with lloyds Bank to keep her company, phoenix Raven Recruitment, afloat. But she was rejected because she had gone into her overdraft in the past.
Amy, from Shepshed, leicestershire, set up the firm in May last year and has so far made a profit of £75,000. But her takings began to dwindle in early March as companies started to let her agency workers go and put recruitment on hold.
However, when she applied to lloyds for a loan last month, she was rejected. The reasons given by her bank included the fact that she had gone into her overdraft several times between November and February.
Amy says: ‘ I feel I am being penalised for having a young business and most people would say I am doing well to make a profit in my first year. This loan scheme was my only contingency plan, and without help from lloyds I doubt I’ll have a business by 2021.’
A lloyds Bank spokesman declined to comment on Amy’s case but says: ‘To qualify for CBIlS or our own support, among a number of criteria, businesses needed to be healthy and viable before the outbreak of Covid-19 and be able to afford to repay the additional borrowing based on their financial performance before the outbreak.’
TOO SMALL FOR AID
A COUplE who run a small tourism business in the Yorkshire dales say they have been ‘left to fend for themselves’. Judith Richards, 64, and husband Jason, 57, offer trike tours around rural beauty spots and have seen their company grow steadily since it was set up six years ago.
The coronavirus outbreak put a halt to business and their whole household income.
But because it is a husband-andwife business run from home, it is not eligible for relief available to larger companies. They cannot get grants worth up to £25,000 because they do not pay business rates and her husband is not eligible for the Job Retention Scheme because he is not on the payroll.
Judith says they have applied for Universal Credit but won’t know if they are going to get anything until May 2. The firm has been granted a loan through the governmentbacked Coronavirus Business Interruption loan Scheme but the money has yet to arrive in their
accounts. Judith adds: ‘If you’re furloughed, your employees can claim money back which doesn’t have to be repaid. 'If you pay business rates, you can get a grant but if you’re one of thousands of small businesses like ours, the chances are you’re going to get a big loan that you’ll have to pay back. That will make life difficult. We’ve been hung out to dry.’
NOT ENOUGH CASH
START-UP founder Marie Farmer fears she won’t have raised enough money to be eligible for help. This week HM Treasury announced a £1.25 billion package to support new companies that are not eligible for other rescue schemes.
A new £500 million investment fund, the Future Fund, is designed to help high-growth companies. And a further £750 million of grants and loans will be given to small and medium businesses that focus on research and development. Marie, 30, wants to apply for the Future Fund, made up of funding from the public and private sector.
But to qualify a company must have raised £250,000 privately in the past five years. Marie is the founder of Mini Mealtimes — a family nutrition app. She and her team began building the app in 2018 and it was launched in January this year. She has previously raised £60,000 for the company and is now trying to raise £350,000 before the end of May. But while she has raised just under £200,000 so far, if she does not reach her total she will not receive any of the investment cash.
Marie, who lives with her son August, four, and husband James, 35, in North London, says: ‘The coronavirus outbreak has scared a lot of potential investors off.’
SLIM PICKINGS
HANNAH MURPHy has seen her fitness business grind to a halt but will not know whether she is entitled to support until June.
The Government has said it will offer cash grants worth up to £2,500 a month to self-employed workers. But anyone with profits of more than £50,000 a year will not be eligible.
Hannah, 35, from Fareham, Hampshire, started Globe Fit with husband Tom, 36, seven years ago and works with 40 freelance instructors. Her overall income is above this threshold but includes dividends from her husband’s company. She has been told by her accountant that the dividend income should not be counted and her self-employed income will be below £50,000.
Meanwhile, she is not eligible for small business grants of up to £25,000 because she does not pay business tax, nor is she eligible for Universal Credit because her husband is still working as a project manager.
‘ I’m not able to claim at the moment,’ she says. ‘If my husband suddenly finds himself out of work, there’s nothing we can do, other than apply for Universal Credit.’
Other business owners could lose out because their dividend income is
not counted. Those who pay themselves in mostly dividends will not receive 80 pc of their full income.
Freelance journalist and RAF veteran Andy Wasley, 37, only registered as a sole trader in April last year, so will not have his average earnings partly met by the government bailout scheme because he does not possess a full year of accounts.
He says: ‘I won’t qualify for any help. I feel completely dispirited.’
Andy, from Sutton, South London, spent 17 years in the RAF, including tours of Afghanistan, before leaving in 2018. He was expecting to earn around £27,000 this year but has now seen all his future writing commissions dry up.
A Treasury spokesman says: ‘We’re taking unprecedented action to support public services, businesses and individuals through this economic emergency. All our support is targeted to make sure we use public funds responsibly, helping those who need it most, while minimising fraud risk.’