With every passing day, we are gradually winning the battle against the pandemic thanks to the vaccination programme and the sacrifices we have all made. As public health becomes safer, we will have to rise to the challenge of rebuilding our country’s economic health too.
Throughout the pandemic many businesses have received lifeline support through generous packages from the UK Government.
In the Highlands, 5,027 businesses have benefitted from more that £175 million in UK Government-backed coronavirus business loans. We also saw 37,900 Highland jobs saved by the UK Government’s furlough scheme too.
That support came on top of the various hardship funds operated through the Scottish Government and which I campaigned for, such as the B&B Support Fund.
As lockdown restrictions are relaxed and more businesses are permitted to re-open, great care will need to be taken in how vital support is changed to help this transition.
If support is reduced too quickly, then businesses will have to rely on their existing working capital as they re-open. However, many businesses will already have used the majority of their working capital to survive the harsh impact of the pandemic.
We cannot forget that whilst some firms survive a recession, they risk going bankrupt during the recovery period, because they do not have the cash flow to get back to an even footing. It’s vital that both UK and Scottish Government support is designed to reduce the risk of this happening.
Our tourism and hospitality businesses in the Highlands, for example, will face a massive outlay to kickstart their seasons and that will not be repaid until visitors arrive. They will need help to ensure they have working capital to bounce back.
That is why I believe our Governments and Banks must work in partnership to create working capital loans. This partnership is required because the last year has been so disruptive to businesses that the checks on cashflow that lenders use have been rendered meaningless and the pandemic has destroyed the value of capital assets.
Gone are the days too where Banks used to pride themselves on being embedded in the local business community. Since the closure of branches across much of the Highlands a lot of local expertise about financing family-run small businesses has been lost.
So how do we ensure Banks have the confidence to lend to local businesses again? The ideal solution is for the Banks to lend working capital loans which are underwritten by the Government, rather than by recovering local businesses. This would give Banks the confidence to lend and would give businesses the cashflow to rebuild.
I am determined to do everything I can to support the recovery of the Highland economy and I will campaign to ensure the banks play their part too.
**Originally printed in the Inverness Courier, Friday 19 March 2021