I recently interviewed some small business owners in the UK regarding the challenges and issues they faced to secure governmental funding during the initial and subsequent lockdowns and restrictions caused by the Covid-19 pandemic. In particular, I asked businesswomen how they navigated the funding arena to meet operating costs during the restrictions and where they were able to find funding.
I share some of what I learned from these conversations here and in our FUNDED magazine to provide insights on how small business owners can get a handle on securing funding in the event of future pandemics.
In terms of funding, given the multitude of sources and types on offer after the onset of the pandemic, I asked interviewees about which types of funding they found the most attractive. Small business owners told me that they prioritized seeking grant funding over loans or financing that had to be repaid. While this is obviously always preferable, the uncertainty of the Covid situation made grants even more appealing. In the rest of the article, I delve into some other issues that emerged from my conversations with small business owners in the UK.
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CHALLENGES IN THE FUNDING PROCESS
A common thread was that many aspects of the funding process can be challenging. Some examples include factors such as poor categorisation criteria set by grant makers as some companies had a hard time understanding where they fit in the criteria set by the government funding bodies. Some of the companies were neither hospitality nor retail and neither did they fit into any other specific category, which made it difficult for them to make the case for grant funding.
Another challenge was presented by difficult to navigate government, and local council web pages listing grant offerings. The information was not presented in a logical and concise fashion, meaning people found the pages and information difficult to both navigate and parse out in terms of what they could apply for, and just as importantly, how they could apply for the funding.
Communications with grant makers were also difficult. Some grant makers only had an email or phone number to be contacted regarding eligibility and applications; when you called the number, it told you to send an email! These types of communication blunders were reported frequently in other parts of the UK during the first months of the pandemic.
As well as communication issues, lack of support and assistance were also cited as a challenge. Some of the companies received no assistance and were left to navigate the grants landscape and information on their own on a trial-and-error basis. Finally, there was a scramble for funding from grant makers since given the uncertainty of the situation and how long it would last, everyone wanted to access the same funds making for long waiting times.
EASE OF ACCESSING FUNDING
After discussing these challenges, I then switched focus and asked business owners about what it was actually like to access certain UK government stimulus funding in the initial months of the pandemic. Their answers suggest that this process was straightforward, at least as it applied to the furlough funding to help pay staff wages during the lockdowns, and company accountants helped with the steps involved in setting this up.
Other easier forms of funding mentioned by business owners as being straightforward to access included apprenticeship funding, Kickstart funding to help hire people at risk of long-term unemployment, as well as business hardship funding on offer from local councils.
OTHER TYPES OF SUPPORT USED BY COMPANIES
Many companies also mentioned non-funding arrangements as having been of help. These included the UK government freeze on business rates, the local taxes paid by companies for their premises; the deferral of VAT payments to avoid having to file and pay them during the pandemic; a lowering of VAT rates from 20% to 5% for businesses in the hospitality and retail sectors; and deferral of filing dates for corporation tax, among other measures.
HOW WAS THE FUNDING USED?
Finally, the last question I asked concerned how companies made use of the funding they secured, what priorities did it align with and what was accomplished. For most companies, the priority for any initial funding was to cope with the ongoing costs of staying in business. Funding was used for raw costs, ongoing subscriptions, and was mainly put into IT costs. These included mobile phone plans, remote working software licenses for all employees and other costs to set up a remote office structure. The idea was to focus on the costs of continuing to do some business while waiting for lockdowns and uncertainty to pass over.
LESSONS LEARNED
Discussions with business owners were interesting in that they seemed to face many of the same issues. Lack of clarity on the funding information available, difficult to navigate resources, and poor or inadequate communications made the job of applying for funding more difficult than it should it have been given the trying environment. A scramble for the same funding represented a further stress factor for small business owners.
Hopefully, if there were to be a future pandemic or other sizeable socio-economic disruption, policy and grant makers would have learned a valuable lesson regarding more forward and effective planning. Small business owners and companies can hopefully use the lessons learned above to be in a better position to keep their businesses going.
For more information on Small business funding opportunities, check out our latest FUNDED magazine.
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