Getting cash to business still the number one economic priority

Getting cash to businesses as quickly as possible remains the economic priority for Government, according to business leaders in Coventry and Warwickshire.

The Coventry and Warwickshire Chamber of Commerce was responding to the British Chambers of Commerce’s Coronavirus Business Impact Tracker which is surveying firms each week to check on the effects of the pandemic on companies.

The latest results from the poll of more than 1,000 companies between April 1 and April 3 revealed that most businesses have not yet successfully accessed the government’s Coronavirus Business Interruption Loan Scheme (CBILS) and the grants for small businesses.

Just one per cent of firms had successfully accessed CBILS and seven per cent are receiving grants, while 57 per cent of firms have three months cash in reserve or less and six per cent of respondents have already run out of cash.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “This tracker is the largest of its type in the country and is a barometer of the effect the Coronavirus is having on business.

“It shows that cashflow is still the number one priority for companies and that matches the intelligence we are getting here in Coventry and Warwickshire and, while businesses are well aware of the different support that’s available, the majority are yet to access it. Hopefully, with some of the adjustments around CBILS that will begin to change in the next week or so.

“Getting cash out the door and into businesses is vital to ensuring businesses can survive the crisis and be part of the economic recovery once we come through this.”

British Chambers of Commerce Director General Dr Adam Marshall said: “Our latest data shows that many businesses face a cliff-edge scenario, either at the end of this month or over the course of the next quarter.

“We’ve seen a big jump in the number of firms furloughing staff, and many are now starting to apply for access to government loan and grant schemes to keep themselves afloat. Yet our research suggests that support is only starting to reach firms on the ground.

“We are pleased that the Chancellor is listening and responding to our calls to strengthen the existing support. Improvements to the CBILS scheme should help more businesses get access to the cash they need over the coming days and weeks. This could be the difference between survival and insolvency for many firms.

“It’s vital that governments across the UK continue to work closely with business over the coming days. Every minute counts, and governments, local authorities and banks must do everything in their power to ensure support gets to firms on the front line more quickly.”

More information on the barometer results

Access to government support schemes:

Businesses continue to report a high level of awareness of the government’s support schemes:

• 59 per cent of businesses knew details about CBILS and 19 per cent planned to use it
• 42 per cent knew details of the grants available for small businesses and 24 per cent planned to use it

However, the Tracker suggests that awareness is not translating into firms successfully accessing these schemes.

Just one per cent of respondents had successfully accessed the CBILS last week, with eight per cent of respondents unsuccessful. The complexity of the application process and a slow or lack of response from the relevant body were cited as reasons for those who were unsuccessful.

It is hoped that the government’s announcements made on 2 April intended to improve access to the scheme will see success rates increase in future weeks.

Seven per cent of respondents were currently using grants for small businesses, but 14 per cent had been unsuccessful. When asked about the reasons they were unsuccessful:

• 83 per cent said they did not meet the criteria
• 14 per cent said they had a slow or no response from the relevant body
• eight per cent said there was insufficient information or guidance available

Cash flow concerns:

Business’ cash flow, an important indicator of overall economic health, remains an urgent concern. The percentage of firms reporting less than a month’s worth of cash in reserve (16 per cent) and one to three months’ cash in reserve (41 per cent) has remained broadly unchanged from the previous week.

Of most concern, the percentage of firms reporting no cash in reserve was six per cent. B2C firms were more likely to report that they had no cash reserves (10 per cent) compared to B2B firms and manufacturers (both four per cent).

The proportion of respondents reporting over 12 months’ cash in reserve remains at five per cent despite a significant increase in the number of respondents.

Businesses furloughing employees:

Thirty-seven per cent of respondents said they were planning to furlough between 75 to 100 per cent of their workforce over the next week, up from 32 per cent last week.

The percentage of firms intending to furlough 100 per cent of their staff increased from 17 per cent in the BCC’s first week’s results to 20 per cent this week.