Covid-confusion: over 415K SME owners still don’t know if they are eligible for government support

  • Less than 1 in 10 SMEs feel adequately supported by the government
  • A fifth are reducing costs through redundancies and furlough
  • A fifth of SMEs ditch offices and go remote full time

Fewer than 1 in 10 (9.6%) UK SMEs feel adequately supported by the government, according to new research from FreeAgent.

Covid-19 has had a huge impact on SMEs and freelancers across the UK, which make up 99% of the UK’s total number of businesses. FreeAgent’s research revealed that 70.3% of SMEs say that they have been negatively affected in some way by the pandemic and 83.5% are taking proactive measures to sure up their businesses in order to survive during this period. This includes:

  • More than a quarter (27.8%) are reducing overheads associated with rent or office space, with a fifth relocating staff to work remotely permanently
  • Almost one in five (19.5%) are cutting staff wages through furlough, redundancies
  • Almost one in five (19.8%) are reducing investment in the business

Many support measures have been rolled out by the government during this period, including Self-employment Income Support Scheme (SEISS), Bounce Back Loan Scheme, Local Restrictions Support Grant and furlough measures. However, less than 10% feel that this support has been adequate for SMEs and 14% say that they feel badly let down by the government.

The complexity of applying for grants and support has also been highlighted as a key barrier throughout this period. Following months of communication and support packages, as of October 2020, the research suggests approximately 415,800 SME business owners still don’t know if they are eligible for government support.

When asked what would have the biggest positive impact for them, SME business owners cited:

  • More government support in the form of grants - 20.6% ranked this in first place, 58% in second place
  • Abolishing unnecessary red-tape and restrictions on small businesses - 21.4% ranked this in first place, 16.4% in second place
  • More government support in the form of fewer taxes - 17.2% ranked this in first place, 21.8% in second place

Ed Molyneux, CEO and co-founder of FreeAgent said, “While the Government’s support packages have helped to reduce job losses, there is still a lot more that needs to be done to mitigate the impact of the pandemic on the UK economy. Small businesses and the self-employed, in particular, have been severely impacted by Covid-19, but many have not been eligible for the kind of support that they desperately need or are unable to identify if they qualify for support because of the complexity of the system.

“With Covid threatening the next six months - at least - of economic recovery, many freelancers and SMEs who are already feeling the strain will now be very worried about the future - particularly as we head into the New Year still uncertain on what restrictions will look like, how long they will last, and what impact they will have on businesses.

“It’s therefore important that every small business that can come through the crisis as a sustainable enterprise is provided with the support they need to stay afloat. Ultimately, they will benefit the economy and the UK will reap the benefits - in post-Covid times and beyond.”

ENDS

Notes to editors

The research was carried out on 500 UK small business owners in October 2020.

Maths

7% of respondents said they did not if they were eligible for government support.

According to the Federation of Small Businesses (FSB) at the start of 2020 there were 5.94m small businesses in the UK.

5,940,000 X 0.07 = 415,800

About FreeAgent

Born out of the frustration that doing the books is just too damn hard for most of us, our award-winning accounting software is loved by over 100,000 small businesses and their accountants and bookkeepers.

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