COVID-19 will take its toll on our future, putting small businesses at risk. So, as an Entrepreneurship researcher and part of the startup ecosystem, Oliver* has gone campaigning to support UK small businesses by signing two petitions early this morning.
Act now to save small businesses & start-ups
The first one urges the British government “to make temporary changes to existing investment schemes to support the UK’s startups during this period of uncertainty. If taken, these actions would incentivise private investor support, ‘reducing the pressure on the public purse’.”
In particular, “in addition to the increase in tax relief, recommendations have also been made to:
- extend tax reliefs to founders and directors of the businesses so that they are further encouraged to save the businesses they represent
- temporarily set aside any EU State aid restrictions, particularly those related to investing in companies that are in financial difficulty
- use existing EIS managers to allocate capital, to stand in place of the banks where equity is more appropriate than debt.”
The second one outlines what needs to be done to protect Britain’s startup and high growth businesses, as follows:
- The Government needs to provide an equity based liquidity package suitable to save startups at risk. While the CBILS covers a proportion of UK businesses, the majority of startups and high-growth companies will be excluded and as a result, unsupported. Without support, thousands of startups will fold in the coming months. The Government should provide a fresh capital injection for startup and high growth businesses through an equity-based solution.
- The Government must fast track payments to startups from public funding schemes – in particular R&D tax credits and Innovate UK funding grants. Private sector liquidity has taken a major hit during the crisis with angels and micro-funds unable to provide startups and high growth businesses with bridging money. It is within the Government’s power to provide these companies with immediate liquidity by expediting the release of these funds.
- The Government must change EIS, SEIS and VCTs to stimulate private equity investment into startup and high growth businesses. Startups are in freefall as they have been left without any debt or equity support. They will need to be able to access more investment from existing investors through Government schemes. If companies and investors are going to recover from this time of great uncertainty, they need a much stronger incentive than currently exists.