Challenges and Role of UK Government in Supporting SMEs during Covid-19

This report examines the challenges faced by SMEs in the UK due to Covid-19 and the role of the UK government in supporting them. It covers management issues, lack of resources, and no investors. The government introduced schemes like Furlough Scheme, Coronavirus Business Interruption Loan Scheme, Relaxation in Tax, and Statutory sick pay relief to help SMEs.

Contemporary
Businesses
Environment

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK...............................................................................................................................................3
Challenges affecting the internal factors of SME,s of United Kingdom...................................3
Examine the role of the UK government in supporting the SMEs during the Covid-19............5
CONCLUSION...............................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Businesses Environment is a combination of the internal as well as the external factors of
the organisation, which affects the business by both ways. The factors put an huge impact on the
environment of business, the components usually can be determined on a scale of negative as
well as positive scale. The external factors put an impact on an enterprise from outside, such as
political, environmental, social and technological these are some external factors which influence
the enterprise. The internal factors are the functions of the organisation which the company
follows like, plans and policies, power and management of the concern company. Both the
factors are very important for the organisation , these factors give the responsibilities to the
manager of the company to take care of them and use them in a controlling manner. The
organization is also of various types, first is the small scale business another is medium scale
business and another one is a large scale business. All the businesses are existing in the United
Kingdom and they have a main role in the expansion of the economy. Some examples of the
SME's of the United Kingdom are, Nicho Media, Entropy and Swoop (Amuda, 2020).
This report is on, the impacts of the internal environment of an organisations and their
strategies of interaction with the external environment during the last two years. Apart from that
in this report, the role of United Kingdom government in supporting the Small, Medium
Enterprises during the Covid 19.
MAIN BODY
Challenges affecting the internal factors of SME,s of United Kingdom.
At the time of Covid 19, most of the organizations were faced the difficulties. It becomes the
external factor which affect the business in a negative manner. As per the guidelines of the
pandemic all the organizations were closed except some which are in the control of the
government or which deals with the necessities like medicals facilities provider, groceries shops
were available for the specific time etc. Due to this, all the organizations suffered huge loss and
its directly put an impact on the economy of the United Kingdom. None of the business would
had a positive impact of the Covid 19, all the business got suffered and their policies,
management got failed to control the process of an organizations(Calabrese, 2022). The newly
companies which entered the market at that time got shut down, many more established
industries were out of the market. That was the time which none of the business wants to see

again, it gave the serious difficulties to the organizations in which the businesses got failed to
overcome with those difficult situations. The COVID time raise the unemployment level which
is the biggest difficulty and it is still facing by the whole world. Hitting of the downfall is
considered to be worst time period for any business, which will bring about the action of laying
off the employees. When the financial circle sources are determined to be doomed for the
country, it will be wrongful action to keep the employee's on hold. The whole business
environment got shacked, people were afraid of investing in any business. The SMEs
organization like “Bed and Breakfast” which have the weak financial sources, and the enterprise
suffered a huge loss in the pandemic. In UK there are various types of businesses of different
level, there are small scale businesses, medium scale businesses and also the larger scale
businesses(Cowling, 2022 ).
The SME's of The United Kingdom, were majorly affected by the position of pandemic
of the Covid 19, the difficulties which were faced by the SME's during the pandemic situation
are mentioned below:
 Management Issues- The SMEs got the issue in their management at the time of Covid,
the management is the important internal key factor of the company or the industries. The
management sector of the organization was tend to be impacted by the situations of the
Covid 19, obnoxiously put the company on a decreasing amount of scope. The
organisation department of management got failed to apply any management strategy,
that time would not gave a chance to any business organizations to build any strategy
which protect their business from Covid 19. For example; “The Swoop”, the challenges
in the management planning and structural organization of regulatory conformity.
 Lack of Resources- The SMEs are known as the small scale enterprises, they have a less
number of resources like, less efficient machinery, less raw materials and the less number
of skilled employee's (Liu, 2022). The Covid 19, would made their less resources more
less and the SMEs were not able to stand out in the competitive market of the United
Kingdom. The resources of the company are the most important internal factors of the
organisation, all the operations of the company is depend on the available resources in the
company. For example, “Antiques Trade” has the lack of resources due to which they
failed in managing the disbursement by the board of directors and the owners of the
company.

 No Investors- The SMEs raised their funds from the various institutions to run their
business operation. A lone working system was unable to follow up to the parameter of
the fiscal values, in such conditions of lower profit management, the organization was
immediately facing issue in raiding the proper amount of funds.. The Covid took those
less investors also who helps the SMEs financially as, there is no liquidity in a market
and everyone and every financial institutions wants to kept their money safe (Hamilton,
2018). For example, “Elder care” is the another SME of UK, which faces the same
problem of raising fund from the market, due to which its unable to grow.
These are some negative impacts of the Covid 19 on the SMEs, these are the challenges which
the SMEs got failed to control. They were not found any help in the market or from the
government. It became really hard to manage the management of the company, the management
of the SMEs got failed, and they had no option other than to quit from the market. The Covid 19,
gave such kind of difficulties which is not in control of the management of the business
company. They have a small goal according to their resources, and for those goals also they don't
have the proper technology to achieve them in a situation like Covid 19.
The management of the SMEs has been failed to protect the company from the crisis. They tried
their level best and used all the management strategies and apply all the plans to achieve the
desired goals in the pandemic, all the strategies got failed, there were no such plans which
protect the standard of the company and make the company competitive in the market (Webster,
2018 ).
Examine the role of the UK government in supporting the SMEs during the Covid-19.
The Government of the United Kingdom is the most helpful form of the government,
which helps the business running in their territory whether the business is small or large. The UK
government always try promote the businesses because they understood that, the economy of the
country is highly dependable on the business sector (Luiz, 2019).
The government of UK interfere in the businesses and assist the SMEs to achieve their
desired goals and helps the nation to grow. The large number of challenges which were faced by
the SMEs of the United Kingdom, reflected the nation so the government, it pledges to be the
responsibility of the authorities to follow up and provide assistance to the SME's. The UK
government analyses the impact of the Covid 19 and understood the difficulties which were
faced by the SMEs due to the lack of financial sources (Ganson, 2019) . To protect the SMEs,

the UK government releases some schemes which helps the companies to stand out in a market
and gave them a confidence to be a part of the business organizations. It is the responsibilities of
the management of the organizations to analyse the schemes of the government and try to
explore that schemes which are beneficial for the company. There are some ways by which the
UK government helps the SMEs to recover themselves from the impact of the Covid 19;
Furlough Scheme- A furlough is a temporary leave of the employee's due to some
special needs of the company or the employer. It means, the employee's got the temporary
suspension and for that time the UK government grants them 80% of their monthly wages and in
the addition they also get entitled to have the national insurance and also the pension
contributions. This scheme is just for the time period of 3 months, to protect the SMEs from the
impact of the COVID. (McConalogue, 2021).
Coronavirus Business Interruption Loan Scheme- The UK government had
introduced this scheme mainly to support the SMEs with an annual turnover of up to £45 million.
The limit of the loan is up to £5 million for a period up to 6 years. In UK there are almost 40
lenders who lends their money including all the banks. The government considered only those
businesses for the loan which has the capability to repaid the loan amount after the crisis (Park,
2020).
Relaxation in Tax- The UK government has breaks the range of paying tax for the SMEs
to protect them with effects of Covid 19. For the businesses which are registered in the purview
of VAT, to whom duly noted who are considered as the payment defaulter. The provided relief is
to make the payment in the routine amount of the VAT. There is no interest or penalties on any
deferred Vat payment (Walker, 2021).
Statutory sick pay relief- Its a relief package for the small and medium enterprises in
which, the employers got the refund from one day rather than fourth day. The refund is from the
government and it covers the full cost.
These are some schemes which are designed to assist the SMEs from the negative impact of the
Covid 19 and also the SMEs to prepare themselves for the long term business effects of the
coronavirus (Hurley, 2021) . As in the heinous time period of the Pandemic, the support needs to
covered by every aspect, the source funding of the SME's can be controlled by the angel donors
and the government authorities.

CONCLUSION
It is conclude from the above report that, the SMEs of the United Kingdom examined
the challenges which impacted the internal environment of the organizations and also their
strategies of interaction with the external environment during the last two years. The UK
government introduced many schemes to protect the SMEs, and give them a chance to get
continue their business operations in the competitive market of the United Kingdom. The
schemes which are announced by the government of the United Kingdom, to safeguard the
SMEs from the diminished positions of the pandemic, includes , The Furlough Scheme,
Coronavirus Business Interruption Loan Scheme, Relaxation in Tax, Statutory sick pay relief
etc. The issues which are faced by the SMEs due to the Covid 19 phase, which scattered the
operations of the industry such as, the Management Issues, Lack of Resources,No Investors etc,
(Keeble,2018).

REFERENCES
Books and Journals
Amuda, Y. J., 2020. impact of coronavirus on small and medium enterprises (smes): Towards
postcovid-19 economic recovery in Nigeria. Academy of Strategic Management
Journal, 19(6), pp.1-11.
Calabrese, R., Cowling, M. and Liu, W., 2022. Understanding the dynamics of UK Covid‐19
SME financing. British Journal of Management, 33(2), pp.657-677.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Keeble, D., 2018. High-technology industry and local environments in the United Kingdom.
In High Technology Industry and Innovative Environments (pp. 65-98). Routledge.
Luiz, J.M., Ganson, B. and Wennmann, A., 2019. Business environment reforms in fragile and
conflict-affected states: From a transaction towards a systems approach. Journal of
International Business Policy, 2(3), pp.217-236.
McConalogue, J., 2021. Understanding UK strategic dependence on Chinese investment: the
case for ‘Partial Decoupling’.
Park, S., Lee, I. H. and Kim, J.E., 2020. Government support and small-and medium-sized
enterprise (SME) performance: The moderating effects of diagnostic and support
services. Asian Business & Management, 19(2), pp.213-238.
Saeed, A. and Ziaulhaq, H.M., 2019. The impact of CEO characteristics on the
internationalization of SMEs: Evidence from the UK. Canadian Journal of
Administrative Sciences/Revue Canadienne des Sciences de l'Administration, 36(3),
pp.322-335.
Walker, D. and Hurley, J., 2021. Did the Covid-19 local lockdowns reduce business activity?
Evidence from UK SMEs.