"There is no support for us": Preston business owner among others not eligible for Government grant
Those who set themselves up as directors of limited companies aren’t eligible for the Chancellor’s emergency self-employment funds.
Small business owners who have been shut out from the Government bail-outs have raised concerns over their survival during the coronavirus crisis.
John Devereux owns Orbit Satellite Installations LTD in Preston, and is among the many one-man and small business owners who feel they have been ignored by the Government.
“There is no support for us and the government is doing nothing to sustain businesses,” he said.
“I have been in business for 31 years, and now work from home because I had to down-scale after the last recession.
“The government is only looking out for staff members at businesses by offering them the furlough scheme, but by not helping small limited companies, these people might not have jobs to come back to.”
Limited companies have been differentiated from other small businesses during the coronavirus crisis by the Government, offering them just 80 percent of what the businesses process through PAYE.
This has left business owners, like John, with as little as £100 a week to live off. He claims that small limited companies should be treated the same as those who are self employed, as they are only ‘limited’ under government advice.
“The Government is just feeding the plant and not the root. They aren’t focusing on the bigger picture by supporting these limited companies by offering them the same grants” he said.
“Small businesses keep getting called the backbone of the country, so why aren’t we being helped?”
Now, limited business owners could be offered a lifeline after it was announced that Treasury officials were looking at launching a new scheme. This came after more than 340,000 people signed a Change.org petition calling on the Government to offer a hand to director-owners.
Since then, an official Government petition has racked up almost 60,000 signatures, and would be debated if it reaches the milestone of 100,000.
Opening up grants to those who pay themselves via dividend income would need a “very significant manual intervention” according to Chief Secretary to the Treasury Steve Barclay, to be able to separate them from people who had earned dividends through investments.
Beth Russell, the Treasury’s tax and welfare chief, had told MPs that they were finding ways around the problem, and were “looking at proposals” to offer emergency grants to business owners who pay themselves via dividends.
Website ‘Money Saving Expert’ gives expert advice to the self employed and small limited companies who are struggling to stay afloat during the Covid-19 lockdown.
It explains how LTD business owners can still push through the struggle, even though there is limited help available.
No official scheme is in place to support small business owners, however limited company directors can furlough the PAYE element of their income, to receive 80% of their salary but must then stop working. This applies even if they are the only employee at their firm.
Limited company directors have also been entitled to the Government's new small business loans to help support their income since May 4. The new state-backed loans, for up to £50,000, are interest and payment-free in their first year.
This ‘bounce back’ loan is a step forward but John, from Cottam, says companies are still taking a risk.
“Small businesses shouldn’t have to take a loan out to survive because they do not know what environment they will be opening back into when the lockdown is lifted.
“We keep hearing standard responses from MPs and being brushed off by them. Many business owners will now feel pressured to take out a loan to be able to simply put food on the table.”
According to Steve Barclay, Chief Secretary to the Treasury, "millions of pounds have landed in bank accounts" via the 'Bounce Back' loan scheme, with £2.1b of loans having already been approved on the first day of the sheme.
An online campaign, #forgottenltd, is calling for ‘equality and fairness’ for business owners who want a review of the Government policies to support small businesses and their owner-directors.
One of their recent tweets says: ‘We are not multi-millionaires. We are hardworking hairdressers, make-up artists, decorators and electricians. We want our businesses to survive.’
More information on the Government petition can be found at: petition.parliament.uk/petitions/310515.