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How Government loans are keeping London businesses afloat

To protect jobs and support as many businesses across the UK as possible during the Covid-19 crisis, Chancellor Rishi Sunak has rolled out an unprecedented package of support.

The Government’s economic plan is one of the most comprehensive in the world, offering a range of financial support for firms of all sizes. To date, more than £22 billion has been lent to British companies during the pandemic.

Meet four London businesses who are not only keeping afloat but also looking towards a renaissance with the help of Government loans…


Battersea Spanish

Battersea Spanish founder Sara Caba

South-west London language school and cultural centre Battersea Spanish is one such recipient of the Government’s bailout for businesses.

For its 500 students, Battersea Spanish represents a beacon of community. Alongside Spanish classes, it offers flamenco dance courses and bilingual events – from film nights to cooking lessons. Before the Covid-19 crisis, there were plans to move to bigger premises, but like most businesses, they’ve had to adapt rapidly.

The Government’s Coronavirus Business Interruption Loan Scheme (CBILS) has made this possible. A low-risk option available to UK-based SMEs with no fees, low interest and a Government guarantee, it’s been a lifeline for the business.

The plans for the funds are threefold. Firstly, being able to cover staff salaries and the expenses they already had is of primary importance. Secondly, the CBISL is helping the business pivot to the remote, digitally-reliant circumstances in which companies now find themselves required to operate. Thirdly, a portion of the loan has been bookmarked for a shift in strategy.

It’s been a steep learning curve for Battersea Spanish, whose workforce is made up of 15 freelance instructors. “It’s taught us that our business is maybe not as anchored to face-to-face as we initially thought,” says founder Sara Caba.

However, so far, so good: Battersea Spanish has retained the majority of its students, finding creative ways to keep afloat and work towards a brighter future.

iQualTech

iQualTech founder Zamir Cajee

Tooting-based online retailer iQualTech is another London firm that was hit hard by the coronavirus lockdown.

Reliant on production networks in China, factory closures in that country strangled the company’s supply chain. Further supply bottlenecks were caused by the slowdown in sea freight. Import costs also surged as the pound plunged against the dollar.

Fortunately, Government support schemes threw iQualTech a financial lifeline. First, it furloughed warehouse staff. The Coronavirus Job Retention Scheme pays workers 80% of their wages, or up to £2,500 a month, but iQualTech tops up the remaining 20%.

The company also sought small business rate relief and received a £10,000 cash payment. Then, it applied for the Government’s Bounce Back Loans Scheme (BBLS), securing £50,000.

“Cash is the lifeblood of any business,” says iQualTech founder Zamir Cajee. “The Government schemes give us enough money to survive the next few months, and make our offices corona-safe, ready for a reopening as early as June.”

The money is also a way to keep people on the payroll so as to ramp up production when it’s safe to do so. “It’s down to business to drive our economy back up,” Cajee adds. “We need to shift from just surviving to thriving. Crises are often followed by a renaissance.”

Romulo Café and Restaurant

Over in Kensington, family-run Romulo Café and Restaurant had just completed a big refurb and were on the verge of opening a second branch when coronavirus struck.

“The various Government packages to support small businesses like ours have allowed us to keep the lights on. Right now I am just grateful for whatever support we can get,” says owner Rowena Romulo, pictured main image.

As well as the furlough Job Retention Scheme, Rowena received a Small Business Rates Relief grant in early April which was paid just a few days later. “I was surprised how easy it was. It allowed us to gear up for our new delivery and takeaway offering quickly,” she says.

Romulo then applied for the Government’s Bounce Back Loans Scheme. She spoke to her bank on 4 May when the scheme became available and filled in a short online questionnaire. The funds were then credited the next day.

These Government grants have allowed her business to retain its loyal staff and provided financial relief, including a 12-month holiday on business rates.

Crucially, Government help provided an injection of cash flow that allowed Romulo to reopen on 1 May with an enhanced delivery service.

Overwhelmed with messages from customers all around London, Romulo has now extended its delivery area and taken on additional drivers.

“We want to build on the welcome fiscal support and keep hospitality in London alive, whatever it may look like in the future,” Rowena says.

The Baby Cot Shop

The Baby Cot Shop’s Toks Aruoture

Forced to close her Kings Road shop at the start of lockdown, The Baby Cot Shop’s Toks Aruoture feared for her business she’d built up over eight years – and for the store itself, selling handmade cots, which she opened three years ago. “We have an online business, but parents like to see what they are buying,” she explains.

Without financial support during the crisis, she would have struggled. Aruoture’s furloughed her assistant and received a £25,000 business support grant from the Government which has helped her keep up with rent for her premises. “That’s helped keep the business alive.”

Business rates – which can be high in Kensington & Chelsea – have also been waived for 12 months. “That is such a huge relief,” she says. “Removing these is like a dream come true for bricks-and-mortar businesses while there are so many other things working against us.”

She’s continued to fulfil projects in the pipeline and online orders for cribs and Moses baskets continue to come in, but overall business has dropped. “Who knows where we’d be without this help? It’s not just the business, it’s my staff and the community – the delivery drivers we use; the freelancers,” she says. “It has inspired me to continue – absolutely we will reopen.”

Small business grants are devolved to national governments. Check with your local authority what kind of grant you may be eligible for. To find out more details about the financial support available go to gov.uk/coronavirus/business-support and to see if your business is eligible go to gov.uk/business-coronavirus-support-finder

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