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Liberal Democrats propose a 6-month revenue lost scheme for small businesses to offset their fixed costs - "furlough for SMEs"

March 2, 2021 9:07 PM

Christine JardineThe Liberal Democrats are proposing a German style revenue loss scheme to compensate small businesses for fixed costs incurred during the pandemic. Such a scheme has already proved successful in Germany and has been backed by the Federation of Small Businesses. The Liberal Democrats now call on the Chancellor to adopt this vital bailout before we lose more small businesses from our communities.

Christine Jardine MP, Treasury Spokesperson for the Liberal Democrats, has called on the Government to go much further than the expected extension of the jobs furlough:
"We are facing a once in a generation shock to our economy and we need a recovery which works for small businesses and the millions of people they employ.

"We need a clear long term strategy to support people out of this, and not just another knee jerk reaction to extend furlough, when its not for long enough or in a way that suits small businesses who need help most.

"They are drowning in rent costs and may not see trade return to normal for months to come. That's why we need a "furlough for small businesses" scheme, compensating them for the revenue they are losing through no fault of their own - so they can keep creating jobs after the pandemic. Small businesses are the backbone of our economy and the Chancellor must wake up to their urgent need for help.

"Small businesses from hairdressers to florists and gift shops are on the brink and if the Chancellor does not offer bold solutions, then millions of people and families who have already suffered too much could pay the price."

The proposed scheme would act as a "furlough for SMEs", offering compensation to cover a portion of a business's fixed costs. Any small and medium sized company (employing fewer than 250 people and with an annual turnover below £25 million) would be eligible.

The Government grants would be based on a small businesses' fall in revenue compared to a period before the COVID-19 pandemic. The small business would have to demonstrate that in the two months leading up to their application they have experienced on average a 30% drop in revenue compared to the same period pre-pandemic.

Businesses would receive up to six monthly grants. The value of each grant would depend on the drop in turnover compared to the same month pre-pandemic.

Each grant would cover a percentage of a business's fixed costs, up to 80%. This would go towards key expenses such as rent, loan repayments, insurance payments, or even business taxes (it won't pay for staff costs as that is covered by the furlough scheme).