Chancellor Rishi Sunak has announced that business interruption loans for small businesses are set to be bolstered, with £90 million in loans under the Coronavirus Business Interruption Loan Scheme (CBILS) being approved over the past week.
Also, larger firms that aren’t already eligible for loans will be allowed to benefit from a new government measure, called the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
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This will involve an 80% government guarantee to allow banks to give out loans of up to £25 million to companies with a turnover of £45 million-£500 million.
Tech Nation’s chief executive has responded by declaring the following five policy requests:
1. Government loans or convertible notes for ineligible companies
Grech said that there are pre-revenue early stage tech companies that still need assistance, particularly with liquidity, and loans with a 100% backing from government or convertible notes would address this need.
“Nearly all businesses we speak to would welcome a cash injection due to cashflow issues,” he said. “While many tech scale-ups are cutting costs and conserving cash, many are in the middle of raising more funding, which we’re already seeing signs of slowing down.
“Companies also want to minimise furloughing – losing staff would mean losing momentum and competitive advantage to domestic and international talent markets and competitors.
“An intervention is hard to target correctly and the government has done well to launch CBILS so quickly. What is needed now are some more detailed, targeted interventions in the tech sector.”
2. Some co-working spaces fail to qualify for loans
Grech’s second point regards co-working spaces, which, while being “one of the UK tech sector’s greatest assets”, he said that many are “in distress” financially and having to close its doors as a result as they currently do not qualify for government loans.
He went on to state that co-working spaces could be repurposed as hospitality spaces in order to gain eligibility.
“Many coworking spaces fall between the gaps of the government support outlined so far, and are losing members who can no longer pay the rent, and are unable to generate profit through events,” said Grech.
“These smaller co-working spaces should be temporarily reclassified as hospitality venues to qualify for small business rates relief.”
3. A deferral of national insurance
In terms of managing what the company already has in place, the Tech Nation chief requested a deferral of pay-as-you-earn (PAYE), or national insurance, under the current circumstances.
“A NI/PAYE deferral could be introduced to enable companies to manage cash flow and staff,” said Grech.
4. An extension of Tier 2 visas
Additionally, Grech said that holders of Tier 2 visas who are made redundant should have their visas extended for 18 months “regardless of employment status”.
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5. Accelerated research & development (R&D) tax credits
Lastly, Grech asked the government to accelerate its tax credits for R&D.
“Accelerating R&D tax credits would help pre-revenue companies with their much-needed access to finance at present to alleviate their cashflow needs.
“This is because many pre-revenue companies, especially venture backed, are working on groundbreaking, innovative solutions.”