A fifth of hospitality and leisure businesses in a Birmingham district synonymous with a thriving night-time economy say they are unable to access new government grants set up following the outbreak of coronavirus.
The companies in Southside fall outside the criteria for the new funding which has been launched to help businesses of a certain size cope with the economic impact of the virus and enforced lockdown.
They say they are now in a battle to survive as the hospitality industry has been hit especially hard as a result of the lockdown.
The Government has established two grants specifically for small businesses and those operating in the retail, leisure and hospitality sectors.
They are worth £10,000 to companies in England operating from premises with a rateable value of up to £15,000 and a second grant of £25,000 is available for those based in premises with a rateable value of up to £51,000.
Those companies operating from premises above that £51,000 threshold are not eligible for this scheme but can apply for others.
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Birmingham’s Southside district is known for its vibrant nightlife and counts famous venues such as the Hippodrome theatre, Electric cinema and Glee comedy club on its patch, alongside countless bars and restaurants.
There is also Chinatown and the Gay Village which every year play host to the Chinese New Year and Birmingham Pride celebrations respectively, welcoming thousands of visitors to the city.
Southside Business Improvement District (BID), which works to promote the area, says it is very concerned that companies there could be forced to the wall if they cannot access fresh finance.
The BID is also calling on the £51,000 cap on rateable value to be increased in a bid to save more companies from financial distress.
Newly published research by Southside BID suggests around 20 per cent of the area’s leisure and hospitality companies are unable to access the Government’s two business support grants.
More than 30 of these ineligible businesses are independent, it says, while a further 75 per cent said their turnover over the past month had been zero or loss-making as a result of the lockdown.
Almost half said that, without an immediate injection of cash, their business would not survive the current crisis, with 68 per cent having already furloughed more than half of their staff.
Southside BID manager Julia Robinson said: “Although these grants have been welcomed, the £51,000 cap on rateable value is incredibly restrictive for venues within the retail, leisure and hospitality sector, leaving many viable businesses facing an uncertain future alongside a frustrating lack of support from the banks.
“Southside is home to some of the city’s most iconic venues which together play a huge role in creating a vibrant night-time economy and employing hundreds of local people.
“To cap the rateable value at £51,000 means some of our most long-standing and successful businesses won’t receive any support, despite being forced to temporarily close.
“Add to this additional pressures around paying rents, insurance claims and stock, not to mention uncertainty around the Government’s furloughing scheme, and for many it feels like their previous success and growth is now a barrier to their future survival.
“We’re calling on the Chancellor to reconsider the current support for businesses sitting above the £51,000 rateable value…..otherwise Birmingham risks losing some of its most popular, distinctive and well-loved venues.”
Iconic Birmingham nightclub Snobs in Smallbrook Queensway is among those Southside venues affected as it has a rateable value of more than £100,000.
Owner Wayne Tracey said: “When the call came from the Prime Minister in March to avoid going to bars and clubs, it killed our trade.
“Like many other hospitality businesses, we have a large amount of stock that we have to pay for which is most likely now going to go to waste.
“Due to our size, we can’t access any of the current grant funding and we were uncomfortable with the initial response from our bank regarding personal guarantees for the Coronavirus Business Interruption Loan Scheme.
“There has been a lot of talking, but not enough action, and every day that passes means we’re put under even greater strain.”
David Dindol runs Missing bar, in the Gay Village, which has a rateable value of £55,000.
“The problem with a system based on rateable value is that this doesn’t take into account the individual needs of businesses and relies on current values being accurate,” he said.
“We sit just across the road from other venues that have a larger square footage than us but a lower rateable value.
“At the moment, our landlord is not in a position to defer our rents so the £25,000 grant would cover that cost for us at a time when, like the vast majority of hospitality venues, we have zero income.”
A statement from HM Treasury said: “We’ve taken action at unprecedented speed to help businesses, jobs and our economy during this crisis, with hundreds of thousands of firms across the country benefiting from our wide package of support.
“The Chancellor has been clear that we will do whatever it takes to keep businesses operating and people in work.
“This includes the Coronavirus Business Interruption Loan Scheme, business rates holidays, tax deferrals and our job retention scheme which launched on Monday and has seen 309,000 claims submitted worth £2.6 billion for 2.2 million employees.”