Coronavirus Small Business Financial Support Guide

As the coronavirus lockdown continues small businesses across the UK are facing tremendous financial pressure with many seeing their cash reserves dwindle. A recent report suggests a third of business owners fear they won't survive until Easter if they are unable to secure additional finance.

To mitigate the economic disruption SMEs are faced with, the new Chancellor announced a number of financial support measures as part of the spring Budget.

With many limited companies facing a lack of specific information on how to manage the ongoing crisis, we aim to shed some light on the schemes available.

In this article, we provide details on the financial support available to small companies and how you can access each specific one.

Coronavirus Business Interruption Loan Scheme

What is it

The Coronavirus Business Interruptions Loan Scheme (CBILS) is designed to help SMEs struggling with cash flow issues because of lost or deferred revenue due to the pandemic crisis. The loans are provided on generous terms to support small and medium-sized businesses.

Who is eligible

The CBILS is available to any UK-based business that has a turnover of less £45 million. You must self-certify that your business has been adversely impacted by COVID-19. Businesses from any sector can apply except:

• Banks and building societies
• Insurers and reinsurers (but not insurance brokers)
• Public-sector organisations
• State-funded primary and secondary schools
• Further-education establishments, if they are grant-funded.

What it covers

The Coronavirus Business Interruptions Loan Scheme helps companies facing a cash crunch get access to finance in the form of loans ranging from £1,000 to £5m.

Business financing services included are term loans, asset finance, invoice finance and overdrafts. Terms for loans and asset finance are up to 6 years. Invoice finance and overdrafts have repayment terms of up to 3 years.

Interest and lender-fees will be covered by government for the first 12 months, so businesses can benefit from no upfront costs and lower initial repayments.

Loans are offered through accredited lenders and are backed by a government guaranteed for 80% of the balance. However, you're still 100% liable for the entire amount of the debt.

How you can access it

Limited companies in need of short-term liquidity should approach one of the 40 accredited lenders with a borrowing proposal.

The lender will consider if your proposal would be viable had it not been for the coronavirus pandemic.

You should also be able to demonstrate that getting financing will allow your business to trade out of any short to mid-term difficulty.

Lenders won't ask for any personal guarantees for facilities below £250,000 but may do so for larger amounts in addition to supporting documents, something we can help with.

Coronavirus Large Business Interruption Loan Scheme​

What is it

The Coronavirus Large Business Interruptions Loan Scheme (CLBILS) is a scheme set up to help large companies whose liquidity has been affected by the coronavirus access finance.

Who is eligible

The CLBILS is offered to any large UK-based business with a turnover of between £45m and £500m who has been impacted by COVID-19.

The scheme is only for to those who have been unable to secure regular commercial financing.

What is covered

Eligible large businesses can access loans of up to £25m which are backed by an 80% guarantee from the government. Finance products included are short term loans, overdrafts, invoice finance and asset finance. All of which will be offered at commercial rates of interest.

This loan scheme aims to support firms that were viable before the pandemic but are facing significant cash flow challenges at the moment. Therefore, giving finance access to more businesses that would otherwise be ineligibles in the short term.

How you can access it

The new scheme is set to launch at the end of April 2020 through a range accredited lenders. Companies with a large turnover should get started by preparing their borrowing proposal.

Making sure it is considered viable had it not been for the current events and showing it will allow the firm to trade out of their short term difficulty.

Coronavirus Job Retention Scheme​

What is it

The coronavirus job retention scheme was created to support employers who would have otherwise had to layoff employees but have instead asked them to stop working while keeping them on payroll, also referred to as 'furloughed workers'.

Who is eligible

Every UK company with a PAYE scheme created and started on or before 28 February 2020 is eligible for the Coronavirus Job Retention Scheme, including charities.

What is covered

HMRC will pay employers a grant worth 80% of an employee's usual wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.

The employer may reduce the employees pay to 80% of normal gross but the full payment will still be made.

The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st if applicable and is initially open for 3 months, but will be extended if necessary.

It's important to note, furloughed employees won't able to perform any work for your business while your company receives the scheme.

The scheme is also made available to sole directors but just like employees, you won't able to work for your limited company while 'furloughed'. Director might need to do some sort of declaration, the details to that will follow as more updates are announced.

You won't be able to claim the grant for employees you've laid off or made redundant.

How you can access it

HMRC is working quickly to set up the necessary systems in place to process these grants. They are expecting have it done by the end of April 2020.

You will need to designate affected employees and notify them of this change - changing the status of employees remains subject to existing employment law.

Once the new portal is made available, you'll have to submit information about the affected employees and their earnings to HMRC.

Your business will then get reimbursed 80% of their wages up to £2,500 a month per employee.

Business Rates Holiday

What is it

This scheme provides rate relief to businesses in eligible sectors so they won't have to pay business rate for the 2020/21 tax year.

Who is eligible

To be eligible your business must be based in England and operate in the retail, hospitality or leisure sectors. The scheme has been recently expanded to include estate agents, letting agencies and bingo halls.

What is covered

The grant covers businesses and properties that are wholly or mainly being used:

• As shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• For assembly and leisure
• As hospitality such as hotels, guest and boarding premises and self-catering accommodation.
• Estate agents, letting agencies and bingo halls

How you can access it

No action is needed on your part. Your local authority will automatically apply your business rate holiday to your bill. You can estimate the business rate charge using the business rates calculator.

Cash Grant for Retail Hospitality and Leisure

What is it

This scheme offers a one-off grant of up £25,000 per property to eligible retail, hospitality and leisure businesses.

Who is eligible

To be eligible your business must be based in England and must be in one of three sectors; retail, hospitality or leisure. Also, your business must have a rateable value of between £15,000 and £51,000. If it's above, you won't be eligible.

What is covered

The scheme covers properties that wholly or mainly used as:

• Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• For assembly and leisure
• Hotels, guest and boarding premises and self-catering accommodation

How you can access it

Those eligible will be contacted directly by their local authority. We do suggest you check your local authority's website as some have decided to work on an application process.

Small Business Grant Funding

What is it

The scheme provides additional support to eligible small businesses in the form of a one-off £10,000 grant to help them meet their immediate financial needs.

Who is eligible

To be eligible your business must be based in England and must be receiving small business rate relief or rural rate relief as of 11 March. Also, your business must occupy property.

What is covered

This is a one-off grant of £10,000 to help small businesses cover on-going costs in-light of the coronavirus and its impact on the economy.

How you can access it

If your business is eligible, your local authority will be contacting you. Although some local authorities have decided to use an application process.

An early payment of £3.4 billion was made to local authorities on Friday 27th March 2020 to ensure grants would get to businesses as soon as possible.

So, if you haven't heard from them yet, we suggest you have a look at your local authority website and contact them to ask for guidance.

Coronavirus Statutory Sick Pay Rebate

What is it

The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers the current rate of SSP that they pay to current or former employees for periods of sickness starting on or after 13 March 2020.

Who is eligible

All UK-based businesses who employ less than 250 employees as of 28 February 2020 can claim back Statutory Sick Pay. They must also have had a PAYE payroll scheme that was created and started on or before 28 February 2020.

All types of employment contracts are included:

• full-time employees
• part-time employees
• employees on agency contracts
• employees on flexible or zero-hour contracts

Charities and connected companies may also use the scheme if they meet above criteria.

What is covered

The scheme will repay your business up to 2 weeks of Statutory Sick Pay (SSP) per employee starting from the first day of sickness. That is if one of your employees is unable to work because they have either contracted the virus or are self-isolating at home.

How you can access it

The government is working on setting up the proper systems to facilitate the refund to employers in the near future. Companies are asked to keep detailed records of their claim for at least 3 years. This should include:

• Why an employee could not work
• Start and end dates of time the employee was unable to work
• Details of the SSP qualifying days when an employee could not work
• National Insurance numbers of all employees who you have paid SSP to

HMRC's Time to Pay

What is it

HMRC's Time to Pay is an existing scheme aimed to support businesses and self-employed people that are facing financial distress and are struggling to settle their tax obligations.

Who is eligible

All UK businesses and self-employed individuals who pay tax and have an outstanding tax liability are eligible.

What is covered

Arrangements are made on a case-by-case basic and depend on your circumstances and liabilities.

How you can access it

If you think you won't be able to meet your financial obligations on time you can contact HMRC to see if you're eligible for support or check in with us first.

VAT Deferral

What is it

VAT registered businesses will be able to defer payments for a period of 3 months.

Who is eligible

All UK businesses are eligible for deferred VAT payments.

What is covered

Your business can defer VAT payments from 20 March 2020 to 30 June 2020. You won't need to make any payments during this time and you will have until 31 March 2021 to pay any amount accumulated. VAT refund and reclaims will be paid as usual by the government.

How you can access it

You don't need to apply for this because this is an automatic offer. If you're currently paying by direct debit and are unable to pay, you should cancel the direct debit with your bank so HMRC doesn't automatically attempt to collect on your VAT return.

Deferral of Self-Assessment Payment

What is it

Individuals and self-employed people who have a payment on account that is ordinarily due on 31 July 2020 may now defer payment until January 2021.

Who is eligible

Everyone who has payment on account due on 31 July 2020 is eligible. The deferral is optional and those who are able to make their payment on time are encouraged to do so.

How you can access it

This is an automatic offer so there is no need to apply and no penalties or interest for late payments will be charged. Income Tax refunds will be paid by the government as usual.

Conclusion

We understand these are challenging times and the amount of information can be overwhelming.

As trusted Chartered accountants in London, we are committed to helping entrepreneurs and small businesses make sense of their finances so they can better navigate the crisis and continue growing their business.

If you need help taking advantage of any of the measure we've mentioned you can contact us on 020 7100 6150 or by requesting a quote directly here.