Financial Support for Businesses during COVID-19

On Wednesday 11th March, Budget Chancellor Rishi Sunak announced that due to the recent outbreak of Coronavirus (COVID-19) that the Government will be supporting businesses who are experiencing increased costs or disruptions to their cash flow.

This includes a temporary Coronavirus Business Interruption Loan Scheme which will support a further £1 billion lending to SMEs, a £2.2 billion grant scheme for small businesses and a dedicated helpline for those who need a deferral period on their tax liabilities.

ADDITIONAL £330BN SUPPORT FOR BUSINESSES

The Government also unveiled a £330bn bail-out to protect the economy. The Treasury will be guaranteeing £330bn worth of loans for businesses – the equivalent of 15% of the country’s economic output. This is to ensure that ‘any business who needs access to cash to pay their rent, the salaries, suppliers, or purchase stock, will be able to access a government-backed loan on attractive terms’. And the sum of the bail-out could increase.

Businesses will now be able to apply for separate interest-free loans, up to £5m each increased from the £1.2m made available in the Budget. While it was announced earlier in the week that all shops, pubs, bars, restaurants, theatres and other businesses in the hospitality and leisure sectors will have their business rates written off for the 20/21 financial year regardless of their size. Smaller businesses in the same industries will also be able to apply for a £25,000 Government grant to help with their business finances over the next few weeks. Even smaller businesses in these industries will now be eligible for grants of £10,000 increased from the £3,000 announce in the Budget last week to help with cash flow.

Business owners who may be struggling with their mortgage due to the Coronavirus will also be entitled to a repayment holiday of at least three months and the Chancellor also states that ‘he will go much further to support people’s financial security’ in the coming days.

HOW TO APPLY FOR THE CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME

(This information has been updated as of 18/30/20)

This scheme means that the Government will provide lenders with a guarantee of 80% on each loan (subject to cap on claims) in order to give lenders further confidence in lending to SMEs. The loan value of £5 million will not charge businesses or banks to ensure the 80% guarantee and will support up to £1 billion in lending on top of current support offered through the British Business Bank.

The scheme will be delivered by the British Business Bank in the next few weeks and it will operate in a similar way to the Enterprise Finance Guarantee (EFG) Scheme which it is temporarily replacing.

To be eligible for support, small businesses must:

• Be UK based with a turnover of no more than £41 million per annum
• Operate within an eligible industrial sector
• Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements
• Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years

Finance terms are from three months up to ten years for term loans and asset finance for up to three years for revolving facilities and invoice finance. Accredited lenders can use CBILS to help a borrower access from £1,000 to £1.2 million.

HOW TO CONTACT THE DEDICATED HELPLINE TO DEFER TAX LIABILITIES

If your business has been affected by the Coronavirus, the Government has set up a dedicated helpline to support businesses and self-employed people concerned about being able to pay their tax.

You can contact HMRC’s helpline on 0800 0159 559.

Their opening hours are Monday to Friday 8am until 8pm and Saturday from 8am until 4pm.

They will discuss your specific circumstances and explore whether you could agree to an instalment agreement, have your debt collection proceedings suspended or if any penalties could be cancelled.

HOW TO GET THE £3,000 CORONAVIRUS GRANT

The Government also announced that small businesses who pay little to no business rates will be eligible for a one-off coronavirus grant worth up to £3,000. Around 700,000 businesses in the UK currently qualify for Small Business Rate Relief (SBBR) or Rural Rate Relief and can apply for the emergency funding.

This funding will be delivered by your local authority in the coming weeks for small businesses with a rateable value of less than £12,000.

HOW TO APPLY FOR THE 100% DISCOUNT ON BUSINESS RATES

Businesses within the retail, leisure and hospitality sectors with a rateable value of less than £51,000 will now have their business rates discounted by 100% for 20/21. This measure was taken by the Government to help support businesses with their finances and cash flow during this time.

Whilst the Government already announced a 50% discount rate to businesses to be applied from the 20/21 billing cycle, this has now been extended by abolishing the business rates charge for the 20/21 financial year.

Businesses that received the retail discount in the 2019/20 tax year will be rebilled by their local authority as soon as possible to reflect the changes. Those who are newly eligible for the expanded retail discount may need to apply to their local authority to receive the discount. Guidance for local authorities on the application of the expanded retail discount will be published by 20th March.