Time is running out…

It’s well known that the Government stepped in and protected jobs and incomes for millions of people and prevented thousands of companies from calling in the liquidators earlier in the year.

Four of these schemes are now in the process of closing down, which will throw up many challenges.  Below we look at them in the order that they are expected to end.

1) Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS)

Many of our clients have successfully applied for these loans, although the success rate nationally for CBILS is now estimated to be 49%. The application process for both closes at the end of September and it is unclear what happens next. The schemes replaced the Enterprise Finance Guarantee (EFG) scheme which was similar in nature and it may be that this will be re-started, but one feature of the CBILS was that the banks were barred from requesting a Personal Guarantee on loans of up to £250k.

We know that some businesses did not apply initially as they wanted to see how things worked out. Have you forecast worst case scenarios for your business and clarified your cashflow needs? With no repayments or interest to pay in year one and no penalties for early repayment, maybe the time to make an application is now…

2) Self Employed Income Support Scheme (SEISS)

The second and possibly final grant of this opened in August and the deadline for applications is 19 October.  The rules are much the same as for the first grant, although it’s worth noting that you can apply for this even if you did not make and application for the first phase. You’ll have to confirm to HMRC, when you make your claim, that your business has been adversely affected by coronavirus on or after 14 July 2020, but you can continue to work. There have been no announcements as to whether there could be a third grant.

3) Coronavirus Job Retention Scheme (CJRS)

This was extended once to the end of October but the signs are that it will not be extended again. It has had the impact of keeping millions in jobs that they are not actually doing. So while hours worked across the economy are estimated to be down 20%, there has been no noticeable increase in the unemployment figure at the moment. The range of estimates as to what unemployment might be next year is anywhere between 2.5million and 3 million depending on who you listen to and clearly now is the time for business owners to look ahead and consider the shape of their business in October and November. Many businesses may only survive in a reduced form and now is the time to be taking decisions.

4)  Bounce Back Loans (BBL)

These have been much easier to access than the CBILS and CLBILS loans as you effectively self-certify your loan application. The maximum loan is £50,000 per applicant and the last date to apply is 4 November 2020 but the Government has the right to extend this.  Once again, if you have been holding off from applying for a loan, the decision as to whether to apply is now looming.

If you would like to discuss the schemes discussed in this article then please contact us here.