UKHospitality boss Kate Nicholls has made a plea for VAT discounts and business rates relief to be extended, warning that the sector has been hit harder than expected by the Government’s “Plan B” restrictions and public concern around rising coronavirus cases. 

Nicholls said hospitality sales have already dropped by over a third in the past 10 days with £2 billion of trade already lost in December as people cancel bookings for festive celebrations. 

Across the hospitality sector, businesses are asking for an extension of the discounted 12.5% VAT which is currently set to revert to the original 20% rate in March 2022. UKHospitality is also requesting a deferral of business rates.

“It is quite clear that the impact of the current guidance and restrictions has been more hard-hitting on an already beleaguered hospitality sector than expected,” Nicholls said.  “It is imperative that local authorities release the discretionary grants and rate relief they have to affected businesses immediately and VAT and rate relief support is extended and not turned off prematurely.”

Kevin von Neuschatz, Group CEO at Stanhope Financial, explains how the post-pandemic recovery of SMEs can be expedited.

When the full extent of the pandemic was first revealed, governments around the world offered generous loan and furlough support schemes in an effort to keep companies afloat. Yet the fact remains that the majority of businesses will have lost customers, suppliers, and partners during this difficult period, and it will take time for things to return to normal.

Critical Support For SMEs

The pandemic also provided the big banks with the opportunity to offer critical support, and many did so. From mortgage protection plans to low-rate interest loans, there are numerous examples of large financial institutions doing their best to support the recovery. Yet the fact remains that for small and medium sized enterprises (SMEs) tier one banking services have remained out of reach for many years. This problem first arose during the 2008 financial crash, which triggered recessions in major economies around the world. Credit lines were pulled, due diligence, background checks and borrowing estimates revised, all making it harder for smaller firms to secure credit and finance.

The tidal wave of financial restrictions triggered by the 2008 crash also meant that many big banks withdrew their services from emerging or high-risk markets in an effort to reduce risk. The sad fact is that for many companies seeking access to high quality financial services, from payments to FX support, the banking infrastructure simply no longer exists anymore. 

Throw in the chaos of the pandemic, with many businesses struggling to bounce back and the lack of support is profound and urgent. In the UK for example, there are around six million SMEs, which are a major source of employment and support for the wider national economy. Anyone who has ever founded a start-up business knows just how hard it is to attract investment. Many of these organisations are in the early stages of developing their product or service and it can take time to build a strong customer base and accelerate growth. These businesses would also benefit from new talent but paying sky high salaries is often a high-risk strategy when margins are tight. 

The bottom line is that many of these companies need external financial support. Bank lending is the most common source of external finance for many SMEs and entrepreneurs, which tend to be reliant on traditional debt to fulfil their start-up dreams. While it is commonly used by small businesses, however, traditional bank finance poses challenges to SMEs, in particular to newer, innovative and fast-growing companies, with a higher risk-return profile. 

The New Normal For SMEs

While bank financing will continue to be crucial for the SME sector, there is a broad concern that credit constraints will simply become “the new normal” for SMEs and entrepreneurs. It is therefore necessary to broaden the range of financing instruments available to SMEs and entrepreneurs, in order to enable them to continue to play their role in investment, growth, innovation and employment. It is now highly important for SMEs to provide credit as well as have legitimate loans, trading and payments support in the post-Covid climate. SMEs could try crowdfunding, or donations. In recent years, with the support of public programmes, it has become increasingly possible to offer hybrid tools to SMEs with lower credit ratings and smaller funding needs than what would be the practice in private capital markets.

Obtaining access to credit and payments support is critical for many businesses seeking to survive and thrive in a post-Covid economy. The time has come for tier one banking services to be accessible to companies of all sizes, and not just reserved for larger, more established companies.  The answer is to work with specialist fintech providers that can combine speedy online services with actual consultancy and advice to ensure the best products are purchased and delivered. 

For ambitious businesses keen to reboot following the devastation of the pandemic, the time for accessing tier one banking services is now.

For the past 16 years, Melanie White Terry has been working through her financial advisory firm, Harbor Financial Group. Her clients are primarily busy and highly successful professionals or entrepreneurs that have comfortably broken the six-figure barrier and want to secure their legacy.

Harbor Financial Group helps clients crystalise their objectives and take the time to understand what they want to accomplish from a business and personal perspective; giving them piece of mind.

What are the typical challenges that clients approach you with in relation to the management of their finances?

Most people don’t have the time, knowledge or inclination to implement all of the ideas and opportunities they want to pursue. Many have done some good planning. They have existing relationships with very good advisers. They have spent a lot of time talking about these things but, for some reason, the job never gets done. We will never undo any of the good work that they may already have in place, we tend to focus on their areas of vulnerability. We take responsibility for seeing their plan to fruition.

We typically explore some or all of the following seven areas:

• Family income and security
• Asset Shifting
• Asset Distribution
• Estate Equalisation
• Business Succession
• Asset Protection and Estate Depletion
• Charitable opportunities

What are the most important aspects that need to be ironed out in order to achieve satisfactory result and a well-organised retirement plan for your clients?

Understanding my clients’ objectives is paramount. I want to know how they feel about the areas they would like for us to consider: security for themselves and their spouse, estate distribution, general terms of their will or plan, succession plan, key employees, and tax issues.

It is also important to gather information about their family, business, real estate, liquid assets, qualified plans, life, disability and long-term care insurance, liabilities, charitable giving, and advisers.

Identifying issues and gaps in their planning and how they feel about them is critical.

Lastly, our clients should have enough discretionary income and/or sufficient assets to be able to either execute or at least begin the plan and the willingness to learn about what might be non-traditional planning opportunities.

How do you assist clients with finding out if they are compliant with federal requirements applicable to retirement? What are the key issues that they face in relation to compliance? 

We collect statements to support all of the information that we gather and keep up with the changing laws and regulations by taking applicable continuing education courses and leaning on the consultants on our team that have a wealth of expertise in tax law as attorneys and CPAs.

Additionally, we do a proper fact-finding analysis to determine their time horizon, investment risk tolerance and ensure that they are in plans for which they qualify, based upon their income, employer plan offerings, business structure, employee information etc.

How can your clients ensure that as much of their estate goes to their family on their death? 

Insurance is one of the foundations in a comprehensive planning strategy. We assess the amount and type of coverage they have already relative to their objectives and determine if there is a gap to fill.

We tend to recommend that our clients have enough life insurance to replace their income and pay off liabilities to creditors and Uncle Sam. When appropriate, we may recommend establishing appropriate trust documents.

Disability income insurance is recommended to protect what could be their greatest asset; their ability to earn an income.

Long-term care planning is recommended to protect assets because most of our clients did not budget for an additional $7,000-10,000 per month of expenses to self -insure above their retirement expenses.

Does Harbor Financial Group offer any solutions in respect of maintaining and growing wealth for future generations of the same family?

We make it a common practice to reach out to beneficiaries and other family members of our clients to address their planning needs as well.

Contact details:

9861 Broken Land Parkway, #150

Columbia, MD 21046

Telephone: 410-740-4719

Website: harborfinancialgrp.com

Email: mwhite@ft.newyorklife.com