Following on the heels of the Government’s extension to the furlough scheme, new research by the #ForgottenLtd campaign shows that nine out of 10 small business owners feel abandoned by the Government amid the coronavirus outbreak. Nearly half do not think they will survive more than three months – putting thousands of jobs at risk and financial ruin for independent business owners.
The #ForgottenLtd campaign is acting on behalf of thousands of small family businesses shut out from current Government support packages, yet the Government expects the same people to top up the furlough scheme from July. The aim of this campaign is to lobby Government, the Treasury, parliamentary select committees, MPs and industry bodies to raise awareness of the disparities in Government support towards small limited companies.
There are 5.82 million small businesses in the UK, employing 13.2 million people and in the aftermath of the Covid-19 crisis, the survival of small businesses will be vital to the nation’s economic recovery.* (source: BEIS Business Population Survey 2019)
Gina Broadhurst, one of the founders of #ForgottenLtd campaign, said:
“In our research, we had responses from over 1,600 small independent and family business owners from across the UK, from a diverse range of sectors and size of business, all who create jobs and pay huge amounts of tax into UK PLC. They are hairdressers, plumbers, event organisers, dog-groomers, designers and creatives, all who have been left behind, with 88% of SMEs ‘very disappointed’ or ‘distraught’ about the level of support that the Government has offered – unlike the self-employed, Ltd companies are not included in any income protection scheme, leaving thousands of small, independent and family businesses facing financial crisis.
“Many of these businesses are sole directors with 55% not having their own premises, so we are talking about ordinary people running businesses, not multimillionaires avoiding tax – 48% of respondents are paid a PAYE salary between £8k-£12k and 29% pay themselves dividends of £20k-£30k pa.”
The new research shows that small businesses have been hit very hard by the impact of Covid-19 with 91% of respondents stating the effect on their businesses has been either very bad or devastating.
The fact that small businesses have been largely left out of meaningful support through current Government Covid-19 support packages is causing great concern, with 88% of respondents stating they were very ‘very disappointed’ or ‘distraught’ about the level of support the Government has offered.
Nearly half of all company directors say they cannot furlough themselves because they fear that their business will not survive if they are not allowed to work. The majority do not think taking on additional debt to save their businesses is a viable solution for their business.
Our proposed solution:
- Extend Small Business Grants to ALL small businesses. We need support now to save and sustain our businesses.
- Extend SEISS to encompass small limited company directors based on ALL income for the last three years capped at £2,500.
- Allow furloughed directors to continue to work so that they can be in the strongest position to emerge from this crisis with their business intact and play their part in the county’s economic recovery.
Key points of the research:
- 91% of respondents stated the impact of the Covid-19 pandemic on their business has been ‘very bad’ or ‘devastating’
- 88% of respondents are ‘very disappointed’ or ‘distraught’ about the level of support the Government has offered
- Creative industries represent the largest grouping out of all respondents to this survey (including creative, marketing, media, music and theatre) at 35%
- Building and construction accounts for the second highest grouping with 13% of all respondents to this survey
- 55% of respondents do not have their own premises
- 45% of respondents are sole directors with no other employees
- 20% have two directors only
- Average number of trading years is 10 years
- 48% of respondents are paid a PAYE salary between £8k-£12k and 29% pay themselves dividends of £20k-£30k pa
- 93% of respondents take less than £50k in dividends
- 61% of respondents stated that they chose to incorporate as a limited company as suggested by their accountants and 47% stated that they felt being a limited company would come across as more professional to their clients and prospective clients
- 65% of respondents are not eligible for any of the Government grants
- Nearly half of all company directors feel they cannot furlough themselves or their business would not survive
- 28% of respondents have furloughed themselves as directors and +26% are furloughing their employees
- 70% of respondents do not want to take on debt to save their business
- 57% of respondents are not eligible for Universal Credit
- 43% of respondents expect to survive financially for the next three months but no longer
- 42% of respondents stated they will live on personal savings for as long as they are able to
