In response to the global outbreak of Covid-19, the UK Government introduced a raft of measures in the budget to support businesses experiencing increases in costs or financial disruptions.
What support is available?
- Support for businesses who are paying sick pay to employees
- Support for businesses through the ‘Coronavirus Business Interruption Loan Scheme’ (CBILS)
- Support for businesses who pay tax
- One-off grants of up to £10,000 to the smallest businesses - who pay little or no business rates * excludes the retail, hospitality and leisure sectors which have access to £25k
- Support for businesses who pay business rates
Support for businesses who are paying sick pay to employees
Sick pay costs can be reclaimed through the Statutory Sick Pay (SSP) relief for SME’s.
With staff sickness is expected to rise, employers with fewer than 250 employees will be able to reclaim SSP from the Government in full for eligible employees unable to work because of coronavirus.
This refund will be for up to 2 weeks (14 days) per employee, available from day 1 (instead of the usual day 4) of the sickness – which amounts to just under £200 per employee.
Where to find further information:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
How to apply:
It is not yet clear as the government is yet to set-up the ‘repayment mechanism’ for businesses - which could take some time.
In the meantime, employers should pay the SSP as advised and maintain up-to-date records of staff absences and payments of SSP in order to make reclaiming simpler.
Eligibility:
- For employees who are off work because they have been diagnosed with COVID-19 or those who are unable to work because they must self-isolate, in line with official guidance
- Businesses with fewer than 250 employees as at 28-Feb 2020
- The Government's Department for Work and Pensions (DWP) on the 16th March confirmed to that these changes will be applied retrospectively from Friday 13 March
Support for businesses through the ‘Coronavirus Business Interruption Loan Scheme’ (CBILS)
A new Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank - a state-owned wholesale bank - will enable businesses with a turnover of no more than £41m to apply for a loan of up to £5m, with no interest for the first 6 months. This will unlock up to 330 billion pounds to protect and support small and medium businesses.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to encourage lenders to give loans to companies that would otherwise be deemed too risky - potentially turning a ‘no’ credit decision from a lender to become a ‘yes’. Interest rates will be similar to existing bank lending.
The government will not charge businesses or banks for this guarantee.
More than 40 accredited lenders including the big four banks — Barclays, RBS, HSBC and Lloyds — provide funds under the scheme as term loans, overdrafts, or asset-based lending secured on equipment or invoices.
Where to find further information:
https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/
How to apply:
Contact one of the accredited lenders listed on this following link:
https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/efg-accredited-lenders/
Eligibility:
- UK based, with turnover of no more than £41 million per annum
- Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support)
- Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirement
- 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 (EU de minimis-State aid rules)
Support for businesses who pay tax
There is support for businesses who pay tax through HMRC’s ‘Time To Pay’ (TTP) scheme.
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay scheme. This is an agreement that would suspend debt collection.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
The system has been used in the past to help businesses affected by flooding and the 2008 financial crisis. During the coronavirus outbreak the usual annual interest charge on deferred tax payments will be waived.
If accepted it determines a payment plan for your taxes and typically a direct debit plan is put in place to ensure payments are not late.
Where to find further information:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
How to apply:
Call HMRC’s dedicated helpline on 0800 0159 559
Eligibility:
- UK based, small businesses and self-employed individuals that currently pay tax
- Each agreement is bespoke and negotiated on an individual basis
One-off grants of up to £10,000 to the smallest businesses - who pay little or no business rates
* excludes the retail, hospitality and leisure sectors which have access to £25,000
Cash grants of £10,000 for small businesses in England in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief - the Treasury (as part of funding package to local authorities who collect business rates) has announced a £10,000 grant for businesses that do not pay business rates to help them survive the coronavirus pandemic and meet ongoing business costs.
Around 700,000 businesses in England currently eligible for Small Business Rate Relief (SBBR) or Rural Rate Relief can apply for the emergency funding.
Where to find further information:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
How to apply:
It is not yet clear how businesses will access the grants, but it will be delivered by Local Authorities.
Eligibility:
- Only applies to small business in England
- For businesses currently in receipt of Small Business Rates Relief (SBRR) or Rural Rates Relief
Support for businesses who pay business rates
Business Rates Relief for small businesses and pubs - the government will not charge business rates, a property tax, on companies in the retail, leisure and hospitality sectors in 2020-21. This includes hotels, restaurants and coffee shops. If businesses in these sectors have a rateable value of less than £51,000, they can now get a cash grant as well. There is also a £5,000 business rates discount for pubs with a rateable value below £100,000 in England.
These measures mean that around 900,000 properties, or 45 per cent of all business premises in England, will not pay rates in 2020-21. Local authorities, which collect rates, will be provided with government emergency funding to make up for the shortfall.
Where to find further information:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
Other considerations
Insurance cover - Businesses should check with their insurance provider if they are covered. Many businesses are unlikely to be covered as most business interruption insurance policies are dependent on damage to property, which will exclude pandemics. Some businesses may have purchased a specific add on relating to notifiable diseases, but some of these will still specify damage to the building. Some businesses may have purchased supply chain or denial of access cover which may meet their needs in this case.
Business continuity planning - Government is also advising businesses to build their own resilience by reviewing their business continuity, developing an understanding on the potential impacts to their supply chains, customers or other factors critical to their operations.
Large businesses - To support liquidity amongst larger firms the government has agreed a new lending facility with the Governor of the Bank of England to provide low cost, easily accessible commercial paper. For more information https://www.bankofengland.co.uk/news/2020/march/hmt-and-boe-launch-a-covid-corporate-financing-facility