Posted: 30/04/2020

Independents finding it difficult to access government’s coronavirus cash

Independent food busineses are struggling to get hold of desperately needed cash promised by the government to help them cope with the drastic measures introduced to slow the spread of COVID-19.

Fine Food Digest has learned that companies throughout the sector are still waiting for loans, grants and employee payments that were supposed to get them through the unprecedented situation, writes Greg Pitcher.

Chancellor Rishi Sunak set out a range of headline grabbing initiatives to support businesses in the historic week that culminated in the closing of pubs, restaurants and schools on Friday 20th March.

With Britain still gripped by onerous social distancing measures as FFD went to press, many small food retailers based in city centres, transport hubs and other suddenly less populated areas were in dire need of support, while yet more were suffering from issues with suppliers.  

Yet red tape surrounding bank loans; delays getting hold of grants and reimbursements; and gaps in the coverage of schemes were providing further headaches for cash-strapped retailers.

Sangita Tryner, owner of Delilah Fine Foods, furloughed all 22 members of staff at the Nottingham outlet in March but was in a race against time to get cash through the Employee Retention Scheme to pass on to them at the end of April.

Sangita Tryner

Her problem was exacerbated because her city centre premises is valued too high for the business to qualify for the Retail Grant. 

“Trade in the city centre just died when the lockdown was announced,” she said. “We are usually 75 per cent food service, 25 per cent retail. Now we are doing delivery boxes but it’s just me and my hubby.

“Our staff are what makes our business. I have a cracking team and I don’t want to lose a single one. But application forms for the job retention scheme were not out until April 20th. That only left me eight days before payroll.” 

Martin Gott, who runs Cumbrian cheesemaker St James, said his business was struggling to access any support from the government despite losing up to 90 per cent of its business.

“When the restaurants closed, distributors stopped buying,” he said. “They’re already carrying stock for a sector that doesn’t want it. 

“We can’t stop feeding our animals, or milking them, and then we have to do something with that milk so we’re diverting it into longer-lasting hard cheese. This means our staff are still working so we can’t furlough them. 

Martin Gott

“We don’t pay business rates as we are a farm diary so we don’t receive the grant. And both the self-employment scheme and the business loans rely on levels of profitability in recent years. As we’ve been investing in livestock and building a new dairy that has brought our profits down.”

Gott said banks had so far not deemed St James viable for a coronavirus emergency loan, and the business was relying on capital reserves to pay wages and bills.

“We are worried – everything depends how long this goes on for,” he said. “Our capital will come under pressure and eventually costs will fall on to our personal income.”

He called for the government to support farm businesses by awarding them grants similar to those enjoyed by high street retailers and helping pay wages of those who remained in employment as well as those furloughed.

“There is a divide emerging where some people are staying at home with nothing to do and being propped up by the government while others are working hard with no support and no income,” he said. 

One Midlands farm shop owner, who didn’t want to be named, said they had received a Retail Grant from their local authority just in the nick of time as bills from suppliers were mounting up.

“Suppliers who might have given us 60 days to pay are now asking for cash on order as well as payment up to date,” they said. “So if you bought £4,000 of goods last month, you have to find £8,000 to make a £4,000 order for this month. It messes up your cashflow.

“What was also difficult was suppliers disappearing overnight – there are quite big companies that I just can’t get hold of. The grant we’ve received and the Business Rates holiday have made a material difference so it’s a shame some councils are not getting this support out as quickly as others.”

Andrew Goodacre, chief executive at the British Independent Retail Association, said the loan scheme “is not working for our members”.

“The banks were initially less than helpful then they got a steer to do more but have been inundated with requests. Their processes are slow and they have reduced headcounts with staff isolating. There is a long wait to get decisions – and time is one thing companies don’t have.”

Goodacre added that his members were still hearing from councils that they were working on the detail of distributing Retail Grants.

“When councils want to take money from business they are very quick to do so but returning it seems to be a huge administration process,” he said. “Some are sending it out directly, others are writing to premises asking for bank details or asking for a form to be filled out on a website. It is a postcode lottery.” 

He added that the wait for the Job Retention Scheme portal to become operational to process payments to employers furloughing staff was also damaging.

“Employers will be paying April salaries this month and none of us are expecting money until May. There is a lag in cash coming into the business and it will cause cashflow problems for some businesses in this very difficult period.

Members are telling us this could be it. They could not be able to reopen. They may not have the money, may not have the energy.”

Meanwhile the British Chambers of Commerce found that just 1 per cent of businesses had successfully accessed Coronavirus Business Interruption Loans when polled in the first three days of April, and just 7 per cent had received grants. 

More than 1,000 people responded to the body’s survey. More than a third were planning to furlough at least three-quarters of their workforce over the following week. BCC director-general 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. Every minute counts, and governments, local authorities and banks must do everything in their power to ensure support gets to firms on the frontline more quickly.”

Read more in May’s edition of Fine Food Digest – read online here.

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