Whilst a lot of staff across the UK are receiving 80% of wages or have been furloughed during Covid-19, there is a huge amount of stress and responsibility on small business owners to maintain a decent living wage and still keep the business afloat.
Those businesses that are reliant on immediate cash flow are suffering the most, such as those involved in catering, events, retail and travel – but the same challenges are presented to anyone with a small business and a team of staff.
Whilst not everyone will be able to survive, many are taking important and sometimes drastic measures to overcome their fall in cash.
Lowering immediate costs
Where possible, business owners have attempted to lower any immediate and pressing costs.
This includes some of the basic overheads such as paying for staff and putting them on furlough, negotiating rental rates with landlords and cancelling any unessential needs or requirements whilst working out of the office including internet, telephone bills, servers, food deliveries and subscriptions.
Beyond this, business owners have lowered costs by pausing or cancelling any marketing spend, external consultants, agencies and freelancers. This includes any online security, tools and platforms that are not in use during coronavirus.
Payment holidays
For any pressing payments, business owners can utilise payment holidays whether this is on their premises, credit card bills and using overdrafts.
If your business has a commercial mortgage on its premises, the UK government have offered a payment holiday of up to 3 months, or until further notice. Your interest is added to the end of the loan term, but this can provide an effective saving short-term and a way to minimise costs.
Last week, the FCA confirmed payment holidays for credit cards for up to 3 months too, however, this is not for business credit cards, only personal credit cards. However, you can raise this with your card provider or put business expenses on your personal card for the time being.
Providers have also offered zero percent interest on using overdrafts of up to £500 – and this may be extended depending on your affordability and customer history.
Using interruption loans and grants
For companies hugely impacted as a result of coronavirus, they can apply for a small business interruption loan of up to £5 million. These have been made available by the UK government in partnership which almost of all the UK banks and largest independent lenders.
The criteria require you to have a turnover of less than £45 million and show that your business has been directly impacted by the coronavirus. Applicants are currently being fast-tracked with the aim to help companies as quickly as possible.
Small business should avoid using high cost credit or short term loans with high interest rates. With the coming months still unpredictable, it is not advisable to take on debt that you cannot afford or could lead requiring more leads and a subsequent spiral of debt.