With the UK set to embark on a new era of global trade negotiations, the prospect of a ‘no deal’ agreement following the Brexit transition period on January 31st is becoming a reality.
The importance of minimising friction in trade and having zero tariffs and quotas is more critical than ever to small businesses across the UK.
The Institute of Directors (IoD) surveyed almost a thousand company directors in late September, the majority said that the pandemic would magnify the impact of a no-deal Brexit on their organisation, while less than 1 in 10 thought the reverse.
Just under half of respondents indicated they were not yet fully prepared for the end of the transition period, with nearly a quarter of respondents reporting that their company may not be ready in time. Over a fifth of those polled said they were fully prepared; with 28% reporting they didn’t expect Brexit to affect their organisation.
Some of the most common actions taken to prepare for Brexit included building up cash reserves, which over a third of respondents had already done. Stockpiling could be set to rise, as 12% said they intended to do so. Concerningly, many firms still needed to obtain EU licences and authorisations.
Building up cash reserves is vital and gathering funds from providers such as V4B Business Finance can provide a lifeline for many businesses. V4B Business Finance provides alternative financial support for UK businesses including those affected by the pandemic or Brexit.
We are an accredited provider of the government backed CBILS loan scheme and assist businesses with alternative finance. Some SMEs will not be eligible for the government initiatives and we can advise on alternative funding.
Allie Renison, senior policy advisor at the IoD, said: “The prospect of no deal would be daunting enough, let alone dealing with it in the middle of a global pandemic. These disruptions won’t cancel each other out, if anything they would compound the pain for British businesses.
“When it comes to preparing for Brexit, directors’ hands have been tied by a number of constraints and competing pressures. Reacting to the pandemic has taken up so much of business leaders’ time and energy throughout the year. On top of this, much of the information companies need is still subject to negotiations.
“Brexit adjustments will further add to businesses’ cashflow challenges in the months ahead. The Government must look to how it can smooth that process. Financial support as seen in other countries, whether through vouchers to help access advice or through extending tax reliefs to facilitate that adjustment, would give small firms a much better chance of coping.”
The Federation of Small Businesses (FSB) also believes the government needs to do more to support small businesses during the transition.
Mike Cherry, national chair at the FSB, said: “Many small firms are becoming increasingly anxious about the state of trade. Small firms still have little idea about our future trading relationship with the EU, and it’s hugely important that small firms, already under the cosh, can prepare for the future. The new Brexit taskforce will help to ensure that there is real engagement between policymakers and business as firms try to ramp-up preparations.
“Which is why the government should introduce UK Transition Vouchers to help small businesses as they attempt to manage both a new trading relationship with Europe and fresh restrictions linked to Covid-19.
“Central to this, we must make it cheaper for businesses to employ individuals which can be addressed by reducing employer national insurance contributions as well as offering further support for those who are thinking about setting up firms or to become self-employed.”
The Financial Conduct Authority (FCA) is stepping up its efforts to ensure firms are aware of what they need to do to prepare for the potential of a no-deal Brexit.
To help firms prepare, the FCA will be running a series of digital adverts signposting to the FCA Brexit webpages and it has set up a dedicated telephone line for advice. This is the most recent phase of the regulator’s preparations for a no-deal. The FCA is urging all firms to consider the implications of a no-deal exit and finalise their preparations.
This is particularly relevant for firms that:
- are a UK business which does any business in the EEA
- passport into the UK and have not notified the FCA for entry into the Temporary Permissions Regime
- have consumers in the EEA
- transfer personal data from the EEA
Types of funding available through V4B Business Finance:
- Corporation Tax
- Personal tax
- Short-term loans
- Professional Indemnity Insurance
- SRA Practising Certificate
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