Are the government’s emergency measures doing enough for UK businesses?

The COVID-19 pandemic has ground financial markets the world over to a juddering halt. The Government has introduced emergency measures to help UK businesses stay afloat—but how effective are they actually proving? NerdWallet investigates.

Nic Redfern Last updated on 22 March 2021.
Are the government’s emergency measures doing enough for UK businesses?

COVID-19 has been truly a black swan event, devastating short-term financial performance and decimating cash flow reserves.

At the end of March, 7% of UK SMEs had already been forced to permanently close their doors as a direct result of COVID-19 lockdown measures, with the same fate projected for a further 12% by May, according to research by Opinium. But NerdWallet’s research, conducted at the end of April, uncovered even more alarming statistics.

How are UK businesses coping with COVID-19? The key statistics

NerdWallet commissioned surveys of 924 UK business owners, senior managers, C-suite personnel and founders.

  • 42% of businesses have closed temporarily
  • London businesses have been hit hardest with temporary closures (62%)
  • 48% have furloughed staff
  • 71% that have furloughed staff are yet to receive the Government funds they were promised
  • 26% have made employees redundant
  • London has been by far the most affected area for redundancies (47%)
  • 35% have brought in external support to help them access Government finances
  • 26% do not feel they have the expertise in-house to successfully apply for Government funding
  • 43% have applied for a Government loan
  • 27% of successful applicants are still waiting for their funds
  • 35% feel the Government could be doing more to help the private sector
  • 40% feel the Government have sidelined small businesses and startups
  • 31% do not have a clear exit strategy
  • 26% are not confident that their managers have the ability to help the business survive

The last time this country faced a recession so grave was nigh on a century ago, when the Great Depression of 1929–1932 ravaged the economy. GDP fell by 5.1%, and 16 quarters passed before the country could even begin to recover. NerdWallet set out to discover whether the Government’s financial measures will prevent us from going down a similar path.

Delays in emergency Government funds could spell disaster for small businesses

On 17th March 2020, the Government announced the provision of state-backed loans of at least £330 billion for UK businesses. This is equal to 15% of GDP, a sum simply unprecedented in peacetime, and would support such day-to-day financial obligations as paying wages, settling rent bills and buying stock. According to Chancellor Rishi Sunak, these loans will be made on “attractive”—but hitherto unspecified—terms.

Three days later, multiple financial schemes and further support measures were unveiled, with the Chancellor pledging that the Government will deliver “whatever it takes” to help companies and households alike maintain solvency. However, NerdWallet has found that 27% of successful applicants to these state-backed loans have not yet received their emergency funding—and the clock is ticking.

The Office for Budget Responsibility forecast on 14th April 2020 that lockdown measures may ultimately shrink GDP by as much as 35%. And with SMEs constituting 99.9% of all private sector businesses and accounting for 60% of the total national workforce, the Government has needed to act fast to save the livelihoods of millions upon millions of Brits.

What measures have the Government introduced?

To understand how UK businesses are being affected by delays in funding, let’s have a quick recap of the three main sources of emergency finance the Government have introduced so far.

Coronavirus Job Retention Scheme (CJRS)

The Coronavirus Job Retention Scheme, also known as the furlough scheme, is the result of thousands of HMRC staff working overtime or coming out of retirement, with the Chancellor describing it as a “remarkable story of public service”.

Having begun on 1st March, the temporary scheme facilitates employee retention for businesses who have been forced to furlough staff. Employers may claim for 80% of an employee’s wages (up to £2,500 a month), plus pension and Employer National Insurance contributions on that subsidised furlough pay.

Self-employed Income Support Scheme

Similar to the Job Retention Scheme, Self-employed Income Support Scheme means self-employed workers can reclaim up to 80% of their profits, up to a maximum of £2,500 a month for an initial period of 3 months (this was later extended as the fall-out from the pandemic continues). The sum will be calculated from a self-employed worker’s average profits from the previous 3 financial years.

Self-employed workers may not receive their payments until June, but in the meantime, they can claim universal credit.

This scheme is only available to self-employed workers with an annual trading profit of up to £50,000.

Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme is designed to support businesses that were perfectly viable before the coronavirus outbreak but now face severe cash flow difficulties. Businesses with an annual turnover of up to £45 million may access finance of up to £5 million. The funds may be used to access invoice finance, loans, asset finance and overdrafts for up to six years.

The scheme is backed by the government-owned British Business Bank and being delivered through more than 100 accredited commercial lenders. The Government will provide lenders with a guarantee of 80% on every loan to encourage continued provision of finance to struggling businesses.

The scheme comes to an end on 31st March 2021 but will be replaced by the Recovery Loan Scheme which will allow UK businesses to borrow between £1,000 and £10 million in a variety of financing options including loans, overdrafts, asset finance and invoice finance.

Future Fund

The coronavirus Future Fund issued convertible loans of £125,000–£5 million to so-called innovative companies that were facing financial difficulties because of COVID-19 lockdown measures. This scheme closed for applications on 31 Jan 2021.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

The CLBILS will provide finance of up to £200 million to businesses with an annual turnover exceeding £45 million If you are borrowing more than £50 million, you must agree to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. As with the CBILS, the Government will provide lenders with an 80% guarantee on every loan. The CLBILS Scheme ends on 31st March 2021 and will be replaced by the Recovery Loans Scheme.

Bounce Back Loan

The coronavirus Bounce Back Loan scheme will help SMEs borrow between £2,000–£50,000 for up to six years. The Government will guarantee 100% of the loan and no fees or interest will be incurred within the first 12 months. Check out whether your business is eligible here. The Bounce Back Loan Scheme ends on 31st March 2021 and will be replaced by the Recovery Loans Scheme.

» MORE: Recovery Loan Scheme

How is the pandemic impacting UK businesses?

NerdWallet’s data was analysed based on size, sector, age and location—and the results have illuminated granular insights into the sheer extent to which not only lockdown measures but also delays in the Government’s funding distribution are rocking businesses nationwide to their core.

Temporary closures

On 17th April, the Financial Times announced that the COVID-19 pandemic had already forced a quarter of all UK businesses to shut for the time being. But according to our research, the figure actually stands significantly higher.


of UK businesses have temporarily closed as a result of COVID-19

Breaking this down further, NerdWallet discovered that 49% of small businesses have had to temporarily close, as well as 50% of startups and 51% of microbusinesses. Analysing by sector produces even starker comparisons: a staggering 84% of businesses operating in hospitality have temporarily closed, but this fate has not befallen a single utilities or legal services company. London has been most significantly affected by temporary closures, with 62% of businesses in the capital being forced to shut, compared to a national average of 42%.

Furlough Scheme (CJRS)

NerdWallet found that 69% of hospitality businesses have already furloughed staff—although this pales in comparison to the massive 86% of businesses operating in real estate that have been forced to leverage the Furlough Scheme.

The furlough scheme was inaugurated on 20th April, by the end of which over 140,000 companies had already applied. Applications on that single day alone cost £4.2 billion over the next three months, and that figure rose further as the take-up increased.In total, the Resolution Foundation think tank estimated that as many as 11 million UK workers could be furloughed, with lower-paid retail and hospitality companies being the hardest-hit, a figure that certainly corroborates with the findings from our research.


of UK businesses have been forced to furlough staff

NerdWallet’s data was collected between 23rd–28th April, just days after the introduction of the job retention scheme. Perhaps our most concerning finding was that 71% of businesses that had furloughed staff were yet to receive financial support through the scheme.

However, the Government committed to a 6 day payment from the claim. So given that it opened on 20th April most would have not been paid on the 28th April.

Managers have been left with the unenviable conundrum of either leaving employees in unpaid purgatory or forking out from the company’s already severely depleted capital to ensure workers aren’t left without any source of income. And with the scheme applying only to employees who were on the payroll on or before 19th March, it is feared that many workers who recently switched firms will fall through the cracks.


Some business owners have been left in the thankless position of having to reduce the size of their workforce, even if they are eligible to be furloughed. London businesses have been worst hit by redundancies, with 47% of businesses having been forced to lay off staff, in comparison to a national average of 26%.

It may be particularly telling that redundancies have been most common in businesses aged 7–10 years (59%), with younger businesses (40%) and especially older businesses (16%) nowhere near as severely affected. This suggests that companies who have reached the age bracket of 7–10 years become vulnerable as they could have lower reserves but a higher level of overheads, a problem apparently evaded by newer businesses that may be more flexible and have lower overheads, and older companies are likely to have built up reserves.

Alternatives to redundancy

Even if a company is struggling to access the CJRS, there are a number of alternatives they may consider before greenlighting redundancy. They may seem unorthodox, but this reflects only the scale and uniqueness of the emergency in which we find ourselves.

  • Seek applicants for voluntary redundancy or early retirement (subject to compliance with age discrimination provisions such as the Equality Act)
  • Freezing or restricting recruitment
  • Lessening hours by mutual agreement
  • Reallocating workers to less affected parts of the business
  • Decreasing or halting overtime
  • Pay freezes
  • Executive pay cuts
  • Reduced hiring of contractors and freelancers

Application for state-backed loans and grants

Despite the welcome rollout of the CBILS, there have been doubts surrounding the efficacy of the scheme.


of businesses have applied for a Coronavirus Business Interruption Loan

Only 40% of businesses have applied for a loan through the CBILS, and just 45% have applied for any of the other state-backed emergency loans or grants.

The figure of how many businesses have applied for a business loan through the CBILS falls dramatically when focusing only on small businesses (35%). A mere 10% of microbusinesses have applied, contrasting jarringly with the 58% of large businesses that have so far submitted applications.

A spokesman for business lobby group the Institute of Directors told The Guardian that “the acid test will be the money reaching firms’ accounts”. We found that 27% of businesses that successfully applied for the CBILS are yet to receive their funds, but it is small businesses (44%) and microbusinesses (39%) that are being most affected by delays in distribution.


Whilst statistics from the Government and other national sources can articulate figures based on hard quantitative data, part of the impetus driving our research was to illuminate the sentiment behind the numbers.

The delay in funding distribution which we have already highlighted does appear to be the primary complaint for companies nationwide, because our research suggests that, on the whole, business owners feel the Government is doing a good job in the circumstances.

Businesses operating in the hospitality sector, despite being amongst the most financially devastated by the COVID-19 pandemic, actually have significantly more faith in the Government’s handling of the emergency (62%) than companies in every other sector bar manufacturing (64%).

Indeed, only 35% of the companies we surveyed felt the Government could actually be doing more to help businesses. Just 40% felt that SMEs and early-stage businesses had been overlooked by the Government’s emergency financial measures—and, fascinatingly, far more large businesses (45%) held this view than small businesses (37%) and microbusinesses (35%).

Overall, it seems that larger corporations credit smaller companies with less durability than the smaller companies themselves know they possess. Indeed, companies aged 11–20 years were the most vocal proponents (60%) of the notion that the Government are disproportionately looking out for more established businesses, yet only 47% of these purportedly maligned companies (aged three years or younger) actually concurred with this sentiment themselves.

It would seem, then, that whilst there is of course always room for improvement—especially given that the Government is having to build the plane whilst flying it, as it were—many of the hardest-hit businesses are not assigning copious amounts of blame to politicians.

The sector that has arguably been most critical of the Government’s emergency measures so far has been agriculture. A mere 15% of agricultural businesses feel that the Government is doing enough to help them through the pandemic, in comparison to a national average of 35%. Furthermore, despite only 40% of businesses feeling that the Government is not looking out for startups and early-stage businesses, this sentiment is held by 71% of agricultural businesses, significantly more so than in any other sector surveyed by NerdWallet.

The clock is ticking for many SMEs

The Government’s financial support schemes aim to secure prosperity for as many UK businesses as possible, size and turnover notwithstanding. But with many SMEs yet to receive Government loans such as those from the CBILS, it seems inevitable that many will tragically fold before they receive the funding which remains their only lifeline.

According to Red Flag Alerts, 509,000 companies were already in significant financial distress as they left 2019 Q4 behind. Considering that over 99% of these businesses have 250 employees or fewer, the COVID-19 crisis is surely leading small businesses nationwide down an irrevocable path to insolvency. Swathes upon swathes of hard-working business owners may decide they would simply never be able to pay back Government loans—no matter how benevolent or “attractive” the terms—and therefore be left with no choice but to shut up shop for good.

But for those business owners who believe that the Government’s emergency funds could genuinely save them from insolvency, they need to be resilient, practice due diligence and fundamentally believe in their own ability to make the best of what is a truly abysmal situation.

Coronavirus support for businesses is out there, so leverage your entrepreneurial nous, accept help where it’s forthcoming and just remember—this will end.

About the author:

Finance Director at NerdWallet UK and business adviser to SME's Nic is spokesperson for small and growing businesses with a strong understanding of the financial needs of business Read more

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