Emergency grants yet to be deployed to businesses in urgent need of financial aid

Around £1.7 billion of the funds set aside for the Small Business Grant Fund (SBGF) and the Retail, Hospitality and Leisure Grants Fund (RHLGF) has yet to be deployed to businesses in urgent need of financial aid, according to new Government data.

The SBGF and RHLGF schemes were both established almost four months ago on 23rd March and still around 14% of funding allocated has remained undistributed to at-risk firms during the coronavirus crisis.

As many as 19 Local Authorities have paid out fewer than 75% of the grants allocated to them by the Government. Essex-based Tendring District Council has only distributed 41% of the £80.27m set aside for small businesses in the north-east Essex area.

John Webber, Head of Business Rates, Colliers International, believes the Government should get creative with the remaining funds and redeploy it to many of the ‘excluded’ businesses and workers that have fallen through the cracks of the Chancellor’s rescue schemes.

“One can conclude that either certain Local Authorities have been too short-staffed or particularly inefficient in handing out much needed grants – or – and what may be more likely, State Aid rules are stopping some businesses who have multiple properties from accessing all the grants,” said Webber.

“This might particularly apply to multiple store retailers. If this is the case, then there will still be some funds going begging.”

Webber criticised the allocation of grants in the first instance, which were based exclusively on business rates liability. This penalised those paying higher rents and business rates in areas like the City of London, despite a large volume of struggling businesses operating there.

“We have a bizarre scenario where on one hand we have three million workers and businesses ‘excluded’ from receiving Government help in terms of grants, or the [£617m] discretionary fund, many of which may soon be pulling the plug on their companies,” added Webber.

“On the other hand, we have £1.7bn of grant money sitting there and not claimed after four-and-a-half months.

“Perhaps it would be sensible to conclude that, if after 15 weeks, 40% of businesses in places like Bournemouth still have not claimed funds, it probably means the grant allocated is very unlikely to be used.

“The Government might consider clawing back any grant monies not distributed by certain Local Authorities to use in those areas where businesses do need greater support.

“Small businesses are the lifeblood of the economy and we urge the Government to re-look at the way it is providing support those ‘excluded’ or ‘forgotten’”.

“Properly utilising £1.7bn that nobody seems to be claiming would certainly seem to be a good start.”

Date published 13 Jul 2020 | Last updated 14 Jul 2020