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Warning to government

Firms warn ‘will run out of cash’ without speedier support

Liz Cameron

Liz Cameron: ‘businesses need cash in the bank now’ (pic: Terry Murden)

Half of Scottish businesses say they will run out of cash within three months unless there is a step up in access to government support, according to a survey.

The Scottish Chambers of Commerce (SCC) found that 13% of those asked will have no cash by the end of this month.

Over three-fifths of firms (64%) of the 350 who responded believe that there are gaps in the current business support measures offered by government.

Half of firms surveyed have already furloughed – or intend to – furlough at least half of their workforce.

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce said: “Both the UK and Scottish Government have moved quickly to staunch this catastrophic decline but businesses are saying is it’s still not enough.

“If we are to prevent the Scottish economy from being damaged beyond recognition, businesses need cash in the bank now to be fit for when the country is able to start returning to day to day activities.

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“Businesses are also looking for an economic recovery plan in Scotland that avoids a restart-stop scenario. We need clarity so we can plan ahead while still protecting the health of people across Scotland.

“Many are also concerned that Scotland’s recovery schedule doesn’t lag too far behind that in England, with the potential of creating a competitive disadvantage in Scotland.

“As we begin to look towards what the economic recovery phase will look like and what it will mean for businesses and jobs across the country, we must always remember the economy is about the people within it who will power us out of this crisis.

“Businesses are playing their part in saving lives and protecting the NHS, but we must also secure the economic future of our country and the livelihoods of those who work within it.’’

A £100 million package of additional grant support for small and medium sized businesses (SMEs) and newly self-employed people opened for applications yesterday.

Three funds, announced on 21 April, will be administered by local authorities and Scotland’s enterprise agencies and will begin to pay out grants by next week.

However, there is continuing concern that some businesses are still being overlooked and that construction sites remain closed in Scotland while some are opening in England.

A judge has given the go-ahead to those businesses seeking a judicial review of the Scottish government’s business grants policy.

Key survey findings

CASHFLOW:

  • 35% of companies are telling us that their current cashflow levels will only cover them for a period of 1-3 months
  • 13% of companies are telling us that their current cashflow levels will only cover them for a period of less than a month
  • 9% are reporting that they have no cash reserves left
  • Overall, over half (57%) of companies have levels of cashflow that will cover them 3 months or less

SIZE OF RESPONDENTS:

  • 337 of the respondents (96%) are SMEs with workforces of less than 250 employees
  • Out of these, the highest trend was of companies with 1 to 9 employees which made up 153 responses or 42% of responses
  • 44 or 13% of responses were sole traders

HOW MANY EMPLOYEES ARE THESE BUSINESSES FURLOUGHING STAFF:

  • 50% of responses intend to furlough at least half of their staff or more, with 19% of these intending to furlough all of their staff
  • The highest single trend recorded was that 78 responses (22%) do not intend to furlough any of their staff

FEEDBACK ON GOVERNMENT SUPPORT:

  • 2% of responses are currently attempting to use the CBILS, 15% plan to use it, 8% have been unsuccessful in applying for this, 66% are not currently using it but know of it
  • 46% of responses are using the Job Retention Scheme, 19% plan to use it, 26% are not using it now but know of it
  • 13% of responses are taking advantage of the business rates holiday for retail, hospitality and leisure, 7% plan to use it and 61% know of it but are not using it
  • 7% of responses are utilising the 25k grant for retail, hospitality and leisure properties with RV of £18-51k, 9% have been unsuccessful in applying for this, 70% know of it but are not using it
  • 48% of responses either are using the small business grant of 10k or plan to use it, 8% have been unsuccessful in applying for it, 41% know of it but are not using it
  • 11% are using the SSP refund, 12% plan to use it with 59% knowing of it but not using it
  • 42% of responses are either using or plan to use Updated MHRC Time to Pay, 44% know of it but are not using it

GAPS IN GOVERNMENT SUPPPORT:

  • Over three-fifths of firms (62%) believe that there are gaps in the current business support measures offered by government, over a quarter (27%) are not sure and a tenth do not believe there are any gaps.
  • The main gaps included a lack of accessibility to the Coronavirus Business Interruption Loan Scheme (CBILS), with many anxious of banks not paying fast enough and at unattractive rates for their business. Other notable concerns were businesses not qualifying for some of the business rates relief measures due to residing in a sublet or serviced office, and of businesses with premises of over £51,000 in rateable value not being eligible for any of this support.

NOTES TO EDITORS

  • This tracker survey had 351 responses
  • Fieldwork was conducted from 14/04/2020 – 24/04/2020 
  • 30 per cent of respondents are in the services sector, 32 per cent of respondents are in the retail, hospitality or tourism sector.
  • 96% of respondents are SMEs (firms with fewer than 250 employees).



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