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All over town businesses are closed, including here in King’s Road, St Leonards.

Lockdown brings tough times for Hastings’ business sector

How is Hastings’ business sector doing during the coronavirus emergency? Are companies managing to access the support offered by the government? Is it enough to guarantee their survival in what is shaping up to be the worst recession in the last 300 years? Nick Terdre spoke to Sean Dennis, director of the Hastings Area Chamber of Commerce and chief executive officer of Let’s Do Business Group.

From his positions in the Hastings Area Chamber of Commerce – “the voice of business for Hastings, St Leonards and the surrounding area” – and Let’s Do Business Group, a social enterprise offering business advice and finance to enterprises across the South East, Sean Dennis is well placed to know how local business is faring under the lockdown provoked by the coronavirus emergency.

Sean Dennis.

“It’s affected every business in some way or other,” Sean said. “There are some sectors in the town, such as hospitality, retail and tourism, which have been particularly affected, and again others in the events sector.

“Some may be like ours, where we’re fully operational but scattered over the town and the county in our various homes, getting to grips with new technology and remote working.”

“But many businesses have either had to close entirely or reduce their services quite significantly, or they’ve pivoted their business – they might be a restaurant but now they are focusing on take-aways.

“We’ve had discussions with businesses which have effectively had their whole year of trading activity cancelled, particularly in sectors such as events – most of those are in spring and summer, and their calendars have been effectively wiped out.

“There’s also the language schools, which are clearly important in Hastings; they were already struggling because there a was a lot of concern around the effects of Brexit, and then Covid has come along and wiped out this year’s business for them.

“The fishing sector, I understand, have struggled locally because the majority of their catch is exported. Those are some of the particular sectors locally that have been affected quite badly.

“On the flip side there are some businesses which have seen opportunities and been able to take advantage of them. Marshall Tufflex have been supplying the Nightingale hospitals, I know a couple of other manufacturers, Technoturn and Solid Developments, have been supplying ventilators or masks and PPE items, so there’s also good news stories out there.”

Accessing support

 A range of support schemes are available to help businesses through lockdown:

  • Bounce Back loans, introduced in late April because of the low take-up of Cbils and offering loans with 100% government guarantee to smaller companies.
  • the Coronavirus Business Interruption Loan Scheme, Cbils, which offers loans from accredited partners with 80% guaranteed by the government;
  • the Coronavirus Job Retention Scheme, whereby the government pays 80% of the wages of employees put on furlough;
  • the Small Business Grant Fund and the Leisure, Retail and Hospitality Grant Fund, which provide government grants via the local authorities to firms paying business rates;
  • the Future Fund, due to start up this week providing government loans to companies which can match them with funds from private investors.

Let’s Do Business is one of 40 businesses outside banks and other financial institutions which are accredited to make Cbils loans. It was also the first port of call for many businesses seeking advice on how best to take advantage of the various support schemes.

“In terms of accessing the various government packages and support, we were absolutely inundated – we had as many enquiries in the first couple of weeks of lockdown as we did in the whole of last year,” Sean said.

“The majority, to be honest, were just businesses desperate for information, for what was out there, what they might be eligible for, and we did our best to help them navigate through all that.

“As an accredited lender for Cbils, our role initially was primarily directing the majority of businesses to apply to their banks. All the lenders have got their heads around the scheme now, there were so many changes in the initial weeks, it was very difficult for the banks and other lenders to keep up with the pace of change.

“We are now averaging just over three weeks from application to drawdown, whereas some of the banks have been taking six weeks or more, so it’s been quite variable.”

For some businesses the experience has been a frustrating one. “We know of a lot of businesses that have not heard anything after a significant period of time and/or when they do, it’s to say either, ‘Sorry, we can’t help you,’ or ‘It’s going to be another three weeks or more before you get an answer,’ which seems a very long time for some firms to have to wait.”

The shutters have been down for more than two months for Currys PC World at Ravenside Retail Park.

Bounce Back

The Bounce Back scheme, under which the government guarantees 100% of loans made by banks, changed things quite significantly, in Sean’s view, with some £8 billion being lent in the first week it was available. “It was what was needed, it’s a much easier, quicker, simpler application process. That’s really been able to address a lot of the immediate finance issues those businesses had.”

He was aware that many banks were very concerned about the Bounce Back scheme  from a fraud aspect. “The way it’s structured, that doesn’t surprise me, it’s all done by self-declaration and only a very light-touch assessment or checking.

“I guess the government have had to weigh up the risks of some of the downsides, such as fraud, against the upside of being able to get cash through to the majority of businesses which are not fraudulent at all and need cash flow.”

Furlough

Sean is aware of a number of local businesses that have put employees on furlough and/or made others redundant. “Of 26 businesses we consulted after 20 April, in the first couple of weeks there were 35 roles that had been furloughed and 18 jobs lost. In the main these are micro-businesses with under nine employees.”

The number of employees in Hasting and St Leonards put on furlough is not available, but given that the number in the country as a whole is in the millions, it is likely to be a high figure.

Many smaller enterprises, like SHOP in St Leonards, are still unable to start trading again.

Grants

With regard to grants provided through local authorities, Sean has in the main had positive feedback from various businesses on how Hastings Borough Council and Rother District Council have handled matters. He was surprised however that take-up had not been higher – on 20 May the government reported that 77% of firms eligible for grants from HBC had applied and 76% of firms in Rother.

Longer term

Speaking as a lender, Sean said he had concerns about what would be happening further down the road. “In 12 months’ time many of these businesses will perhaps still be quite weak, and we may well still be in recession, and they have to start making repayments covering interest, that’s when many businesses will start to struggle.”

Nevertheless he could understand why the take-up of loans has been relatively low. “I heard it reported that only 5% of eligible businesses have actually applied for the Bounce Back loans or the Cbils scheme.

“Personally I’m not surprised by that – put yourself in the shoes of a business owner, who maybe doesn’t know when he’s going to be able to start trading again, and therefore what his future cash flow and income and profitability is going to look like. Business is run on confidence, so if you’re not confident, you’re less likely to want to take on more borrowing.”

Lockdown eased

The lockdown has now been eased somewhat, with garden centres allowed to reopen, employees unable to work from home encouraged to return to work and citizens urged to stay alert rather than stay home.

“Boris’s announcements give a bit more hope, but there’s no details on that, no clarity,” Sean said. “So it’s a cautious welcome to get some sectors back up and running, but on a practical basis, the couple of firms I’ve spoken to recently that are in those sectors are really struggling to see how that would be feasible, certainly by early July.

Discount store ESK recently opened its doors again.

“On the practical level, one assumes that social distancing is going to continue to be key for any business. If you’re a restaurant or a cafe, you want to get as many people as possible in and turn them over as quickly as possible, and one assumes that with social distancing there are going to be a lot of restrictions on that, tables are going to have to be six feet apart, so that’s going to restrict your capacity, and then you get into the financial consideration of whether it’s actually worthwhile opening.”

“For larger outlets with outdoor space, it might be easier to do the social distancing, they’re more likely to be able to make it work.”

Greater flexibility

Sean welcomed the greater flexibility introduced by the government when the furlough regime was extended past July. “At Let’s Do Business we’ve looked at furlough, thankfully we didn’t need to take it up, but in some ways it was quite rigid – if you signed someone up, they had to be signed off for three weeks minimum, and they couldn’t do any work for you.

“What they now seem to be inferring, post July, is that you can bring people back on a part-time basis, and that could be a good thing. We’ll wait to see the detail – as ever, the devil is in the detail.”

Employers will also be expected to share the wage burden post July – again the detail will be important, Sean said. “Businesses don’t want the cliff edge of suddenly going from 80% cover right through to nothing, but if it’s done on a gradual basis, that’s a good thing.

“I guess, if you’re able to bring someone back to work on a part-time basis, while still receiving some support, that being back at work they’ll be able to help you generate some level of income, in which case why shouldn’t you contribute something towards their salaries?”

“One of the other areas of concern is that as we come out of lockdown, what we know from previous recessions is that businesses tend to muddle along for a while and find a way to make things work, but there always comes a point where they need to access finance and funding.

“It could well be that post lockdown is when a lot of or maybe all of the government’s support is going to be phased out, so I think that as we go into the back-end of this year and next year, that’s when a lot of businesses will start struggling.”

It’s too early to know, Sean said, how many enterprises will be forced out of business by the lockdown. “But it’s a real concern for Hastings and St Leonards, with our heavy reliance on the tourism and hospitality sectors. A business might be able to open, but if they can only let a handful of people in at a time, is that sufficient to actually cover the costs of opening the door?

“If not, many may take the position not to do so. And the longer it carries on that either a business can’t open its front door, or can only do it on a very limited basis, it can only weaken the position of those businesses.”

Ocean House, where both the Hastings Area Chamber of Commerce and Let’s Do Business Group are based, is bedecked with rainbows, while many office staff are working from home.

In addition to the support packages mentioned above, HBC recently invited expressions of interest for a discretionary grant fund aimed at small businesses which were not eligible for the Small Business Grant Fund or the Retail, Leisure and Hospitality Fund.

 

Posted 13:50 Friday, May 22, 2020 In: Covid-19

Also in: Covid-19

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