Government support for businesses – a summary

Published by Andrew Tate  on 12 May 2020

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Last updated 19 May 2020

The Chancellor has announced numerous measures to support businesses as a result of the Coronavirus. Here we provide a summary (as of 19 May 2020) of the support available for businesses during this period of disruption.

Small-medium sized businesses

  • Small Business Grant Fund – A local authority cash grant of £10,000 for businesses that are currently eligible for Small Business Rate Relief or Rural Rate Relief, to help meet their ongoing business costs. Local authorities will be contacting small businesses that qualify shortly. There is a list of local authorities and their grant funds, here.
  • Coronavirus Business Interruption Loan Scheme (CBILS) – the British Business Bank’s CBILS facilitates business finance to small and medium sized businesses. Businesses with turnover up to £45m can borrow a maximum of £5m under the scheme, and businesses with turnover of between £45m and £500m can borrow up to £25m under the scheme. This is aimed at businesses that are viable. SME businesses can access the first 12 months of that finance interest free. The borrower remains 100% liable for the debt but there is now no requirement for personal guarantees of loans below £250k. See our guidance on CBILS here or read our Q&A article here.
  • Bounce Back Loan – This loan enables smaller businesses to access finance more quickly and helps businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year. Read more about the Bounce Back Loan here or read our Q&A here.
  • Future Fund – will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme. Details have now been published and can be found here.
  • Statutory Sick Pay (SSP) support – small and medium sized businesses (fewer than 250 employees) will be able to reclaim SSP paid for sickness due to COVID-19 for up to 2 weeks sick pay per employee – read more here. For our payroll clients, the KR team are set up to provide you with the information you will need to make a reclaim.

Larger businesses

  • Coronavirus Large Business Interruption Loan Scheme (CLBILS) – supports large businesses, with an annual turnover of over £45 million. All viable businesses with turnover of more than £45 million per year can apply for up to £25 million of finance. Firms with a turnover of more than £250 million can apply for up to £50 million of finance. Read more here.
  • The Corporate Financing Facility – a new lending facility from the Bank of England to help support liquidity among larger firms via the sale of commercial paper, helping them bridge Coronavirus disruption to their cash flows through loans of at least £1m. Read more here.
  • International traders should consider the existing support that is available from the Department for International Trade and UK Export Finance. See our guidance

All businesses

  • Coronavirus Job Retention Scheme– A staff retention scheme for employers, whether businesses or charities. HMRC will cover 80% of furloughed workers wage costs, up to a cap of £2,500 per month. Businesses will have to designate which employees they wish to furlough (if not done already) and advise the employees before they can apply via the HMRC for the grants. The scheme has now been extended for four months, until the end of October, but the Government may modify the scheme to accommodate part-time working in late May and will ask companies to start sharing the cost of the scheme from August You can read more here.
  • Coronavirus hotline– HMRC is offering additional support via a Coronavirus hotline (0800 015 9559) to assist businesses or the self-employed concerned about meeting their tax liabilities.
  • Deferring VAT and Income Tax payments – automatic support
    • Deferring Value Added Tax (VAT) payments due to be made between 20 March 2020 to 30 June 2020. Any deferred amount will not have to be paid until the end of the current tax year
    • Income Tax payments due in July 2020 under Self-Assessment system will be deferred to January 2021, and no interest or penalties will be charged on the deferred amount
  • Time to Pay service – All businesses and self-employed people in financial distress, and with upcoming or outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service. Our specialists are available to assist you in putting such measures in place. Further details can be found here.

Specific sectors

  • Business rates holiday for retail, hospitality and leisure businesses for the 2020 to 2021 tax year – you can estimate the business rate charge you will no longer have to pay this year here.
  • Cash grants for retail, hospitality and leisure businesses
    • The Retail and Hospitality Grant Scheme provides businesses with a cash grant of up to £25,000 per property.
    • For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
  • Pubs and restaurants are now allowed to trade as takeaways. The relaxed rules will be introduced as soon as possible and will last for up to 12 months. The relaxation will apply to hot food and drinks only. Serving or supplying alcoholic drinks will continue to be subject to licensing laws.
  • Charities that are hit financially by Coronavirus will be able to apply for government loans if less than half their income comes from trading activity. Read our Coronavirus – guidance for charities and not for profit organisations article here.

Working safely during Coronavirus

The Government has published guidance to help employers, employees and the self-employed understand how to work safely during the Coronavirus pandemic. It includes guides for ‘Construction and other outdoor work’, ‘Factories, plants and warehouses’, ‘Labs and research facilities’, ‘Offices and contact centres’, ‘Other people’s homes’, ‘Restaurants offering takeaway or delivery’, ‘Shops and branches’ and ‘Vehicles’.

How can we help?

Our team is well resourced and experienced in advising companies and not-for profit organisations, allowing you to focus on managing your business during this trying period. We are set up to work from home so you can expect the same level of service, albeit remotely rather than in-person. We have:

  • A team of debt advisory and corporate finance experts used to working with banks and other lenders, and can support you with CBILS and CCFF scheme applications. We understand how lenders are currently making credit decisions, and for CBILS loans above £250k particularly can help with your application.
  • Our restructuring and insolvency experts can advise businesses under stress about the options available to them.
  • Our tax experts will also be on hand to advise you on applications to HMRC for the Time to Pay initiative, for corporate tax advice, in particular around tax implications of debt restructuring and R&D tax claims. We also have VAT & Duty experts who can support you in revising your VAT position who have a suite of over 40 ideas where cash savings may be found.

Do call us on 0330 124 1399, via our enquiry form or speak to your usual Kreston Reeves contact.

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