Covid-19 SALON TALK: How I have embraced govt business grants

Thanh Vu, managing director of four Dream Nails salons, shares how she has made the most of financial support from government – and navigated obstacles – during the coronavirus pandemic…

Coronavirus brought unprecedented challenges to businesses and while it has presented numerous opportunities, financial prudence, financial planning and financial support has been key to the survival of many small businesses. It’s also been important to take advantage of growth opportunities that have subsequently presented themselves. The old saying goes: ‘be fearful when others are greedy and greedy when others are fearful.’

I am particularly grateful for the supportive measures the government has put in place to prevent business closure and ensure business survival. Admittedly, we always want more and would clearly prefer to be able to trade under normal conditions. However, all things considered, measures have certainly been of huge assistance.

I hope that any good business that is sustainable in the long term should be able to withstand external shocks. The economy was on a record run of growth and expansion prior to Covid-19, which should have enabled money to be put aside for a rainy day.

Coinciding a prudential business financial plan with supportive measures from the government should equate to business survival and an ability to take advantage of more realistic commercial rents and demands on smaller businesses in the future.

Even though the Dream Nails salons were forced to close due to Covid-19, that did not mean I could take a break from work.

As managing director, it is crucial that I drive the business forward and take responsibility for staff.

Part of this responsibility, is to ensure I am aware of all grants and measures provided by the government that will assist Dream Nails.

I am sure local council business rates departments are well aware of my name following numerous emails and phone calls to chase up on when the grant applications would open and how long it would take before the monies were to be paid! I am always wary of any announced scheme or grant and only count my chickens once the money is in the company bank account.

What measures did Dream Nails try to take advantage of?

Note: Dream Nails operates in four premises across Essex/London so in some cases some of the government grant timings may differ (such as entering Tier 4).

Rent write-offs

Initially, I reached out to the landlords of all Dream Nails premises to request a rent write-off for three months. In all but one case, the landlords refused to write off the rent. Surprisingly, the only landlord who agreed to a three-month rent write-off was an individual landlord. He clearly understood the need to work with businesses in such unprecedented circumstances and appreciated that we have always paid rent on time.

This gesture has made me more included to invest in that premises for long-term improvements. It certainly seems landlords with good tenants in their properties have suffered relatively little damage from Covid-19. There is no use in cutting your nose off to spite your face – landlords and business owners have to work closely together to ensure they are on the same page and ultimately that will mutually benefit both parties. Think long-term!

Bounce Back Loans

Dream Nails took up the offer of a Bounce Back Loan. When presented with the opportunity of interest-free financing for the first 12 months followed by interest rates of only 2.5% a year for up to nine years, I thought it too good an offering to not take up.

Not only would this loan give us more working capital during a time of zero business income but regular business outgoings, it would be on terms far more favourable than a small business could get during normal times.

In addition, the Bounce Back Loan has presented Dream Nails with the opportunity of showing lenders that we are financially stable and that we have the ability to borrow and ultimately repay the loan – extremely useful for Dream Nails’ credit history.

Here’s a summary of the Bounce Back Loan scheme:

• The scheme helps small and medium-sized businesses borrow between £2,000 and up to 25% of their turnover.
• The maximum loan available is £50,000.
• The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
• The length of the loan is 6 years, but you can repay early without paying a fee. No repayments will be due during the first 12 months.
• Before your first repayment is due, your lender will contact you about further options to: extend the term of your loan to 10 years, move to interest-only repayments for a period of 6 months (you can use this option up to 3 times) or pause your repayments for a period of 6 months if you have already made at least 6 repayments (you can use this option once).

LOCKDOWN 1.0:

March 2020: Small business grant fund/retail, hospitality & leisure grant fund

Following government measures to support small businesses, Dream Nails was been the benefactor of a small business grant in March for each of its premises. This has enabled Dream Nails to pay regular outgoings and ensure working capital has been bolstered.

About

• The Small Business Grant Fund (SBGF) was announced in the 2020 Budget, alongside the Retail, Hospitality and Leisure Grant Fund. The funds provide financial support for small firms and businesses in the retail, leisure and hospitality sectors.
• Under the SBGF, businesses in receipt of either Small Business Rates Relief (SBRR) in the business rates system were eligible for a payment of £10,000 in line with the eligibility criteria. Businesses with a rateable value of £51,000 or over were not eligible for this scheme. Additionally, businesses which are not ratepayers in the business rates system were not included in the scheme.
• Under the Retail, Hospitality and Leisure Grant Fund, businesses that would have been in receipt of the Expanded Retail Discount on 11 March with a rateable value of less than £51,000 were eligible for cash grants per property. Eligible businesses in the retail, hospitality and leisure sectors with a property that has a rateable value of up to and including £15,000 and less than £51,000 could have received a grant of £10,000.
• Eligible retail, hospitality and leisure businesses with a property that has a rateable value of over £15,000 and less than £51,000 could have received a grant of £25,000. Businesses with a rateable value of £51,000 or over were not eligible for this scheme.

LOCKDOWN 2.0:

5 Nov – 1 Dec 2020: National Restrictions Grants

Dream Nails received grant funding in the second national lockdown between 5 November to 1 December, which forced all nail and beauty salons to close.

About

Grant funding was been made available to those businesses that were unable to trade and were forced to close during the additional restrictions. During this period, a single grant covered the four-week period in November.

The grant was based on the rateable value of the property on the first full day of restrictions.

• If your business has a property with a rateable value of £15,000 or less, you may have been eligible for a cash grant of £1,334 for each 28-day qualifying restrictions period.
• If your business has a property with a rateable value over £15,000 and less than £51,000, you may have been eligible for a cash grant of £2,000 for each 28-day qualifying restrictions period.
• If your business has a property with a rateable value of £51,000 or above, you may have been eligible for a cash grant of £3,000 for each 28-day qualifying restrictions period.

TIER 4

20 Dec 2020 – 2 Jan 2021: Tier 4 Closed Grant

Dream Nails was forced to close again on 19 December when Essex/London entered Tier 4. As a result of this, the government announced measures to support businesses that were forced to close from the 20 December payable every 14 days. This payment is still to be paid by the various councils but it should be automatically processed by local councils for any business that received the national restrictions grants.

About

• If the business has a property with a rateable value of £15,000 or less, you may have been eligible for a cash grant of £667 for each 14-day qualifying restrictions period.
• If your business has a property with a rateable value over £15,000 and less than £51,000, you may have been eligible for a cash grant of £1,000 for each 14-day qualifying restrictions period.
• If your business has a property with a rateable value of £51,000 or above, you may have been eligible for a cash grant of £1,500 for each 14-day qualifying restrictions period.

LOCKDOWN 3.0

5 Jan – 15 February 2021: National Restrictions Grants

Lockdown 3.0 has not changed anything for Dream Nails as all salons were already forced to close due to Tier 4 restrictions. As with the Tier 4 Closed Grant, this payment is still to be paid by the various councils but it should be automatically processed by local councils for any business that received the November national restrictions grants.

About

• If your business has a property with a rateable value of £15,000 or less, you may have been eligible for a cash grant of £1,334 for each 28-day qualifying restrictions period.
• If your business has a property with a rateable value over £15,000 and less than £51,000, you may have been eligible for a cash grant of £2,000 for each 28-day qualifying restrictions period.
• If your business has a property with a rateable value of £51,000 or above, you may have been eligible for a cash grant of £3,000 for each 28-day qualifying restrictions period.

ONE-OFF GRANTS

January 2021

Dream Nails is due a new one-off grant per premises in very much the same way as the one off payment under the March small business grant fund. This is still to be paid by the respective local councils but details are as follows:

The new one-off grants come in addition to billions of existing business support such as the national restrictions grants detailed above. The one-off top-ups will be granted to closed businesses as follows:

• £4,000 for businesses with a rateable value of £15,000 or under
• £6,000 for businesses with a rateable value between £15,000 and £51,000
• £9,000 for businesses with a rateable value of over £51,000

BUSINESS RATE RELIEF

Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020 to 2021 tax year. Depending on the rateable value of your nail and beauty salon this could potentially have made a huge saving for businesses over the course of the 2020 tax year.

MY TOP TIPS

I think it best to get in early with grant applications in case the demands simply outweigh what is available. I understand the government has fully backed the scheme but in large part many of the schemes are operated by local councils – pressure on councils is immense and I have thought it best to try and get in early to eradicate any potential risk of non-payment even if incredibly small.

Good luck to everyone out there. It has been tough but there is light at the end of the tunnel. Remember – the nail and beauty salon industry is one of the few thriving parts of the UK economy – I only see this trend growing.

www.dreamnailsbeauty.com