Coronavirus: Over one in three closed small firms fear they’ll never reopen

Four in ten small businesses have had to close since the beginning of the coronavirus outbreak in the UK. (Getty)
Four in ten small businesses have had to close since the beginning of the coronavirus outbreak in the UK. (Getty)

One in three small firms that have been forced to close due to the coronavirus pandemic fear they’ll never reopen amid widespread redundancy plans, a new study has found.

Four in 10 (41%) small businesses have had to close since the beginning of the coronavirus outbreak in the UK. Of those that have closed, 35% are not sure whether they will ever be able to reopen again, according to a survey of 5,471 small business owners by the Federation of Small Businesses (FSB).

More than one in three (37%) small employers are considering, or have already made, redundancies and 71% have furloughed staff under the UK government’s job retention scheme to aid the survival of their business.

The UK chancellor Rishi Sunak has promised to extend government wage subsidies for furloughed workers until the end of October, and will loosen the rules to allow them to work part-time.

The FSB supports the introduction of part-time furloughing, saying that this will allow small businesses to work according to client demand and gradually bring staff back into the workplace, while being supported by the scheme the rest of the time.

FSB national chairman Mike Cherry said: “Part-time furloughing is not a nice to have, it’s fundamental to saving jobs.”

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Paying a mortgage or lease on their premises has been a struggle for many small businesses as over a quarter (28%) have failed to make, or faced severe difficulties in making, rent or mortgage repayments as a result of the economic impact of the coronavirus pandemic.

A quarter have had to postpone product development plans as the coronavirus has brought the economy to a standstill.

A fifth (21%) of small businesses that export products said they have had to either reduce or cancel international sales.

Despite the government attempting to help small businesses stay afloat through the Coronavirus Business Interruption Loan Scheme (CBILS) and the new Bounce Back loan scheme, many small business and self-employed workers reported having struggled to access government-initiated support.

Close to one in seven (15%) small firms that pay business rates — a tax on non-domestic property — said their landlord charges them for rent and business rates in a single recurring bill, meaning they risk missing out on cash grants linked to the payment of rates.

Although the government has now launched a discretionary fund aimed at helping businesses in this situation, 81% do not know what share of their single charge is accounted for by rates, making it difficult for them to establish what, if anything, they might be able to receive.

READ MORE: UK furlough scheme for workers extended to end of October

Almost one in 10 (8%) business owners have applied for universal credit, with close to a third (29%) having their applications rejected. Of those that have had applications approved, only 13% have received their advanced payment.

Many (68%) small business owners are excluded from the Self-Employed Income Support Scheme, as they are directors of limited companies.

The FSB is calling for more access to improved local hardship funds and support for those excluded from existing grant schemes.

“The impact of the coronavirus pandemic has been felt right across the small business community, with thousands of small firms all over the UK fearing for their futures,” said Cherry.

“The government has stepped-up with a huge range of support for millions of small businesses and sole traders, from income support schemes, to cash grants, to help with accessing finance and business rates breaks.

“Policymakers now need to realise that the economy will not go from zero to a hundred overnight once we’re into the recovery phase. The crucial support that’s on offer needs to be kept under review, and adapted to reflect the new normal as we chart a course back to economic recovery.

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“The support measures that we’ve secured are helping the vast majority, but they’re not helping absolutely everyone. We’re hearing from business owners who are falling through the cracks and taking their stories straight to the top of government.

“Policymakers need to be in listening mode and prepared to help the most vulnerable over the challenging months ahead. No one should be left behind.”