How will SMEs cope with a second national lockdown?
In a recent Downing Street press conference, Boris Johnson admitted the current coronavirus restrictions had failed to curb an alarming second wave of the pandemic, and as such, announced tougher restrictions across England beginning on 5th November. This will include strict curbs on travel and the closure of pubs and restaurants once again.
While this news may come as a blow to a number of small businesses, many are resigned to the fact that a national lockdown is what is needed to get caseloads under control. Research by Paragon Bank revealed that UK SMES are showing resilience, agility and innovation as they enter the second phase of the coronavirus pandemic, with 49% believing that the learnings from the pandemic will help their business become more resilient in the future.
While small firms have always been the most adaptable and nimble companies in terms of changing their offerings to adapt to market demand, schemes such as the Enterprise Investment Scheme will be more important than ever, by offering investors a tax-efficient way to back small growth businesses, reducing risk and increasing the potential for returns on investment.
The sad truth is that some sectors – hospitality for example – will bear the brunt of this second lockdown the most. While gimmicky schemes like ‘Eat out to help out’ helped to increase the number of bookings and footfall during the month of August, they will not help create longevity in the hospitality industry.
Something that would give longevity to the hospitality sector and SMEs as a whole, would be to encourage investment and allow hospitality businesses to qualify for EIS. To bring the sector back to life, it’s going to need a lot of investment – the government alone will not be able isn’t going to stop the rot. You need people who are willing to take the risk to come along and buy up these assets.
Making growth investment more easily available to these SMEs that are looking to grow should be a priority. Following our investment into Transcend Packaging – a firm who have shifted to PPE production – they have nearly doubled their workforce. This demonstrates the value of extending the scope of SME investment schemes such as the Enterprise Investment Scheme, which will hopefully be addressed by the Government in the near future.
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