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COVID-19 Financial help for businesses

The government has announced and continues to announce measures to assist business during this difficult time.  The financial assistance is coming in many forms; whilst it might seem like there isn’t much information available, we have to remember that these times are unprecedented and will take time to become available.

But here’s what we are clear on, so far……

Bounce Back Loan

The scheme will help small and medium-sized businesses affected by coronavirus to apply for loans of up to £50,000 and is due to be launched on Monday 4th May.

The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years and there will be no payments due in the first 12 months and the government will work with lenders to agree a low rate of interest.

Eligibility

You can apply for a loan if your business:

  • is based in the UK
  • has been negatively affected by coronavirus
  • was not an ‘undertaking in difficulty’ on 31 December 2019
Who cannot apply

The following businesses are not eligible to apply:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • state-funded primary and secondary schools
If you’re already claiming funding

You cannot apply if you’re already claiming under the Coronavius Business Interruption Loan Scheme (CBILS). If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

Economic Resilience Fund

The Welsh Government this week announced that they are to provide another £400 million to the pot to assist businesses in Wales.

They will provide:

  • grants of £10,000 to micro businesses employing up to 9 employees. This will include sole traders who employ staff.
  • grants of up to £100,000 for small to medium sized companies with between 10 and 249 employees
  • additional support for larger companies that are socially and economically crucial to Wales

The scheme portal was opened on Friday 17th April and was available to businesses that are employers and VAT registered, again this left many businesses in the mire. The Welsh government received around 9,000 applications and due to the scale in demand increased the amount of funding of this phase to £300 million.

The fund is now PAUSED to give the Welsh government the opportunity to consider how else they can support businesses, charities and social enterprises.

Statutory Sick Pay (SSP)

Employers will be able to pay SSP from day 1 of absence. This will be refunded for companies with less than 250 employees as at 28 February 2020 and who are based in the UK, who have employees that need to take 14 days off due to coronavirus.  

The government will work with employers to set up the repayment mechanism for employers as soon as possible.

How to access the scheme

The online service to reclaim SSP is not yet available.

Business Rates

Business Rates are a devolved tax in Wales – the following assumes you are based in Wales.  For guidance if you’re based in England please refer to GOV.UK

Business rate relief

If you are a shop, leisure or hospitality business you will get one year’s relief in 2020 to 2021.  Meaning you will not have to pay any business rates during this time.

If you are a pub with a rateable value of between £51,000 and £100,000 you will receive £5,000 off your business rates bill.  Your local authority will contact you directly as they will administer this through the business rates system.

To find out where your local authority is with this funding:

The majority of the local authorities have now paid out all that are entitled. If you think you are entitled and have not received anything please contact your local authority.

Grants

If you are a shop, leisure or hospitality business with a rateable value between £12,001 and £51,000 you will get a grant of £25,000.

If you are a shop, leisure and hospitality business with a rateable value of £12,000 or less you will get a grant of £10,000.

If you run your business from shared offices, you will need to check with your landlord if your business is responsible for the business rates in relation to your office.  You should have already received your 2020 to 2021 bill from your local authority, as they are normally sent in early March.

How to apply

This will be administered through the business rates system and your local authority will contact you with details once they are available.

Business Interruption Loan Scheme

A temporary Coronavirus Business Interruption Loan Scheme has been made available which is being backed by the British Business Bank’s 40+ accredited lenders. SMEs will be able to apply for a bank loan, an overdraft or asset and invoice finance packages.

Whilst the UK government is going to guarantee 80% of each loan to give lenders confidence in continuing to provide finance to SMEs.  You will still be subject to the lender’s criteria.  And of course you are still going to need to make the capital repayments as you would any other loan. In essence a month after you receive the loan you will be making repayments towards it. The government will only pay the interest.

The government will only guarantee the loan if you can then demonstrate that you cannot make the payments. For example, if your business has not continued to trade and you are going to have to close the company down. The lender and the government will expect you to make every endeavour to satisfy the loan.

On 20 March 2020 the chancellor announced that the loans will be interest free for the first 12 months, with government covering the interest payments.  There has been no guidance on the actual interest rate charged and what the interest rate would be after the 12 months.  If you are considering getting this loan you should of course consult with your accountant to understand the criteria, before signing on the dotted line.

Am I eligible for the finance?

The scheme has been designed to support smaller businesses, classed as SMEs who would not normally meet lending requirements for a fully commercial loan or other finance facility, but who are considered to be a viable business in the longer-term. To be eligible for a facility your business must:

  • be UK based with annual turnover of less than £45m
  • have a robust borrowing proposal which, were it not for the current crisis, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty
  • smaller business from any sector, with the exclusion of, Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); the public sector including state funded primary and secondary schools; Empoyer, professional, religious or political membership organisation or trader unions, can apply for the full amount of the facility.

You can review a quick eligibility checklist by clicking HERE, which will open to the British Business Banks website.

How to apply

In the first instance you should approach your current bank, especially if they are on the list of 40+ accredited lenders. You can find the list HERE. The business finance facilities included are:

  • term loans
  • overdrafts
  • asset finance
  • invoice finance

Not every lender can offer ever type of finance listed. So we suggest you speak to your account about which is most appropriate for you and your business needs.

Deferring VAT and Income Tax payments

The government will support businesses by deferring VAT payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under Self-Assessment will be deferred to January 2021.

VAT

The deferral will apply from 20 March 2020 until 30 June 2020. All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. You will not need to make a VAT payment during the period but you will still have to submit your VAT return to HMRC as normal. You will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal. Please note however that you will need to cancel your Direct Debit if you cannot make the payment as normal, once your return is submitted the payment will be taken automatically.

Income Tax

Your payment on account which is due 31 July 2020 will be deferred until 31 January 2021. You are eligiable if you were informed that you will need to make a payment on account when you filed your 2018/19 tax return to HMRc by 31 January 2020.

How to access the scheme

This is automatic, no penalties or interest for late payment will be charged in the deferral period.

Payroll Rescue

The government is working hard to ensure that businesses and employees are protected and have put the Coronavirus Job Retention Scheme in place.  This will help you avoid making redundancies. Don’t forget, when all this is over you are going to need those employees who are already trained and part of your team, to come back to work.

During this time, you need to discuss the need to furlough them.  Once this decision is made and you access the scheme the employee cannot undertake work for you.  You will then be able to claim a grant of up to 80% of salary up to £2,500 per month.

If you are able you can top-up the extra 20% but you are not obliged to do so.

If you decide that you need to furlough your employees you need to have a conversation with them and tell them what you are proposing to do and why. To be honest in these uncertain times you cannot give your employees too much information, in our experience, people will panic because they feel like they don’t have enough information, so ne honest with them.

This is in essence a solution to a very big problem and reassuring them that you need to do this to make sure they have a job to come back to will make them feel valued. They will still receive 80% of their normal pay and they will, hopefully, still have a job to come back to.

The scheme has been extended to the end of June and may be extended further if necessary.

How do you access the scheme?

All UK businesses are eligible.  The portal opened on Monday 20th April and can be found HERE

Information you will need to gather before making a claim:

  • the number of employees you have placed on furlough
  • your company or personal UTR
  • claim dates e.g. 1 April to 30 April
  • Gross Pay in claim period
  • employers NIC in claim period, but don’t forget if you are in receipt of the £4000 employers allowance you will not be able to claim the NIC through CJRS
  • employers pension in claim period
  • employees name and NI number

If you are unsure how to calculate the claim, HMRC have provided a calculator

If you have specific questions regarding employees that are on maternity leave or off sick with another illness please ask us a question on here and we will respond as quickly as we can.

Companies House filing

During this time it has been agreed that Companies House filings such as your company accounts and annual Confirmation Statement can be filed late but you must apply to Companies House before the deadline.

Businesses affected by COVID-19 can now apply to request an extension to their filing requirements. If you do not apply an automatic penalty will be imposed. The registrar has very limited discretion not to collect the penalty.

The content contained within this document has been obtained from information gathered from GOV.WALES, GOV.UK and British Business Bank and may have changed since publication and has been provided as a guide only.  You should always seek professional advice pertaining to your own individual circumstances.

For more guidance on the impact of coronavirus in the workplace, check our Employers’ duty of care page.

And for more around self-isolation and absence issues, click to our Self-isolation and absence page.

If you are concerned about laying off staff, check the advice on our What if I need to lay off my employees? page.

And for specific details on how to furlough employees, visit our How to Furlough Your Employees page

Updated: 29 April 2020

 

Do you want to know how we can help you?

We would be happy to discuss your requirements and put the most appropriate package together for you.

 
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