Preserving our enterprise heritage. Now is the time to be bold.

I don't know what proportion of the extra million universal credit claimants are former business owners, but it’s bound to be a big number, and will continue to grow fast.

I have already shared my ideas about how to make CBILS faster and more responsive to the needs of SMEs, but how do we repair the long-term damage? If five and a half million businesses become four, or, god forbid, less, how do we rebuild, and quickly.

Of course, it’s not just business owners we have to consider, since a proportion of currently furloughed staff will probably face redundancy as those companies that do survive look to run lean and restore cash reserves. That’s an awful lot of talent and potential to be forced onto Universal Credit.

It doesn’t have to be this way.

The government can instead use this desperate situation to bring about a new era of entrepreneurialism.  So many of those that will have lost jobs will have real talents and marketable skills, so why not help them exploit the crisis and turn adversity into advantage, and, in doing so, unleash a tsunami of innovation and creativity which could send the UK shooting back to prosperity.

Start Up Loans Scheme

I believe the government could transform the existing packages to help people start their own business. To begin with I would completely overhaul the Start Up Loans Scheme. Hitherto, although of some use it has been rather ponderous in its delivery and has many barriers to success. I would sweep them away and replace it with a much slicker delivery and monitoring system. I would also increase the upper limit to a more realistic £40,000 from the current £25,000. 

In a similar way to the CBILS scheme, I would also make the first year interest free and have a capital repayment holiday of two years.

To further encourage the unemployed to have a go, any recipient of Universal Credit that gets a Start Up loan should also be allowed to keep receiving their benefits for the first eighteen months of self-employment as this will further diminish risk.

Reboot and restart.

Then there is also the matter of those businesses that went under during the crisis. The majority of these would have been perfectly viable before all this hit us, so why not help them get going again? My suggestion would be to offer a kind of ‘reboot’ funding to sit alongside the Start Up scheme. Where a person can demonstrate that their business was commercially sound prior to COVID-19 (the tax records alone should be evidence enough) funding to restart should be made available on the same terms as the Start Up Loans scheme.

In providing these encouragements and safety nets the government will have moved the dialogue on from encouraging risk taking and innovation, to expecting those who receive benefits to at least actively consider it. The numbers are compelling. The existing Start Up scheme has the leeway to accept a more forgiving number of its loans as write offs, yet the real number remains more like a traditional lender might expect. Funding millions of people into self-employment and away from benefits therefore make tremendous good sense and should bring us a new generation of innovators. What a great way to secure our nations heritage as world leaders in commerce. We are, after all, a nation of shopkeepers.