Amid the generous government support schemes for different types of business unveiled so far, assistance for one group is conspicuous by its absence. Many of Britain’s start-up companies are unlikely to qualify for most of the help available.
The problem for many of these companies, including thousands of technology businesses, is that while their sales may be growing very rapidly, they have yet to break even.
This will make it almost impossible for them to claim support from the government’s Business Interruption Loan Scheme, which is only for businesses that can show they would have been economically viable had it not been for the Covid-19 pandemic; most banks will only lend to previously profitable companies.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Nor are these start-ups going to get much help from the Self-employment Income Support Scheme. A few one-man bands may qualify, but most are beyond the scope of the scheme and no start-up launched after 6 April 2019 is eligible.
Still, it’s not all bad news. Some start-ups can tap the Job Retention Scheme, which could help them retain and pay workers. Other initiatives, such as the right to defer VAT payments, may also be valuable. Still, start-ups that may have seen their revenues disappear in this crisis have so far been offered little tailored support despite the potential contribution many of these businesses will make to the UK economy, employment and tax revenues inthe future.
Many of those in the start-up sector are very worried. Crowdfunding platform Crowdcube has this week launched the Save our Start-ups campaign, an attempt to lobby ministers for direct assistance. The incubator Founders Factory is calling for a “runway fund” that would take equity stakes in high-growth start-ups to support them through the crisis. There are international models for delivering such assistance. Both Germany and France have launched bespoke Covid-19 support schemes for their fledgling firms, offering help such as equity investment, loans and tax credits. If the UK fails to follow, it could lose a generation of businesses with huge potential.
David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.
BoE: Millions of mortgage borrowers will be hit with higher repayments next year
News Higher interest rates are yet to fully hit households and monthly mortgage repayments will rise between £200 and £1,000 – how much will your home loan go up by?
By Marc Shoffman Published
Halifax: House prices rise for the second consecutive month
UK house prices rose again in November, suggesting a resilient property market amid economic turmoil in the past year- are we heading for a crash?
By Vaishali Varu Published
UK wages grow at a record pace
The latest UK wages data will add pressure on the BoE to push interest rates even higher.
By Nicole García Mérida Published
Trapped in a time of zombie government
It’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
By Max King Published
America is in deep denial over debt
The downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
By Alex Rankine Published
UK economy avoids stagnation with surprise growth
Gross domestic product increased by 0.2% in the second quarter and by 0.5% in June
By Pedro Gonçalves Published
Bank of England raises interest rates to 5.25%
The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
By Ruth Emery Published
UK wage growth hits a record high
Stubborn inflation fuels wage growth, hitting a 20-year record high. But unemployment jumps
By Vaishali Varu Published
UK inflation remains at 8.7% ‒ what it means for your money
Inflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
By John Fitzsimons Published
VICE bankruptcy: how did it happen?
Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
By Jane Lewis Published