C-19 - Support Measures

Posted on 06/01/2021 by Dane Marshall

Coronavirus Measures > Support Measures For Businesses Affected By COVID-19

The COVID-19 pandemic has been an extremely challenging time for everyone, in particular business owners. There have been lots of different support handed out by the Government in order to help keep businesses running throughout the pandemic. We saw the introduction of the Furlough Scheme in order to try and keep employees in jobs, to ‘Bounce Back Loans’ and more. The hospitality industry in particular was hit hard and given the most support as they had to close their doors almost immediately.

Hospitality, Retail & Leisure

On the 5th January, the latest announcement was that £4.6 billion would be provided to businesses during Lockdown 3.0 - both protecting jobs, and supporting businesses. News of this extended lockdown means that businesses are set to be closed for even longer, until at least Easter time.

For those businesses in hospitality, retail or leisure, who have been forced to close for the duration of this pandemic may be entitled to a one-off grant of up to £9,000. This is designed to help these hard-struck businesses when they can finally open their doors again in Spring.

There are lots of other grants available for other businesses, and we wanted to explain each option clearly so you can easily identify which (if any) you are applicable for.

Businesses Forced To Close

As well as the one-off grants, there is an additional £3,000 available for businesses who have had to close their doors. The money doesn’t stop once they re-open either, these businesses will be eligible for up to £2,100 per month for those that were impacted.

One-off ‘top-up’ grants will be allocated to closed businesses as follows:

  • £4,000 for businesses with a rateable value of £15,000 or under.
  • £6,000 for businesses with a rateable value between £15,000 - £51,000.
  • £9,000 for businesses with a rateable value of over £51,000

There are of course some requirements for these one-off ‘top-up’ grants, which are:

  1. Any businesses which is legally required to close, and can’t operate effectively remotely, is eligible for a grant.
  2. Business support is the responsibility of the devolved administrations, which will receive extra funding as a result of these announcements.
  3. This funding is available on top of the funding which has already been guaranteed by the UK government, in order to help businesses plan for their COVID-19 response in the months ahead.
  4. Small businesses in the devolved administrations should be able to benefit from other support packages provided by the Government, including the various business lending schemes.

Business Rates & Discretionary

As well as the grant funding, the Government have also stated that they will continue to provide 100% business rates relief for those businesses within the retail, hospitality and leisure sectors.

The current discretionary fund for Local Authorities is £1.1 billion, and an additional £594 million will be allocated to support other businesses which are not eligible for the grants above. Local businesses will have to apply for this funding through their Local Authority.

Coronavirus Job Retention Scheme (CJRS)

This is more commonly referred to as the Furlough Scheme. It was launched at the start of the pandemic to help employers continue to pay the salaries of their employees. Initially, this was due to end on the 31st October 2020, but just before we went into Lockdown 2.0, this deadline was moved to the 31st March 2021. This has once again been extended until the end of April 2021.

Here are some of the main details you need to be aware of regarding the CJRS extension:

  • Employees who are unable to work will receive up to 80% of their wages (up to a maximum monthly amount of £2,500).
  • Employers will be able to continue topping up these payments if they choose to.
  • Employers will have to cover both the employers’ and the employees’ NIC and pension costs.
  • Flexible furlough, where staff can begin working part-time, will be allowed. Employers will have to cover pay for the hours worked, but can use the furlough scheme to cover any normal hours.
  • Employees must have been registered on PAYE by midnight on 30th October 2020 in order to be eligible.
  • Employees employed as of 23rd September 2020 and on the payroll who were made redundant / stopped working for the employer afterwards, also qualify.

The first claims under this new extended CJRS can be made from Wednesday 11th November. As the CJRS has been extended, it is worth noting that the Job Support Scheme and the Job Retention Bonus have been paused for the time being.

Self-Employed Income Support Scheme (SEISS)

The self-employed are also set to continue receiving Government support during Lockdown 3.0, and the SEISS extension will apply for 6 months starting 1st November 2020.

The level of support offered will be 80% of average trading profits calculated for November, December and January. A maximum grant for the three month period will be £7,500 and the claim window will be open as of the 30th November 2020.

There has been an indication that an additional second grant will be available for the self-employed from the period 1st February 2021 - 30th April 2021, but the details for this have yet to be announced.

In order to be eligible for this scheme, the following criteria apply:

  1. You must have been previously eligible for the SEISS first and second grant (even if you didn’t claim either of them).
  2. You must declare that you intend to continue to trade and are impacted by reduced demand due to Coronavirus, OR,
  3. You were previously trading but are temporarily unable to do so due to Coronavirus.

Coronavirus Business Interruption Loan Scheme (CBILS)

The CBILS is a way to provide financial support to SMEs in particular, who have been negatively impacted by the pandemic. The rules surrounding eligibility for these loans have changed significantly, opening up the loans to even more smaller businesses.

The main change is that insufficient security is no longer a condition needed in order to access the scheme. So if you weren’t eligible for CBILS initially, it may be worth applying again as this rule change has increased the number of businesses which are eligible for the scheme. The Government have also announced that the CBILS is being extended until 31st March 2021, so there is plenty of time left to still apply.

There hasn’t been much clarity regarding how CBILS work, so if you are considering applying here are some things you need to know:

  • CBILS are being distributed by accredited lenders, which include: high street banks, challenger banks, asset-based lenders, smaller specialist local lenders.
  • Up to £5 million can be borrowed, in any of the following forms: term loans, overdrafts, invoice finance or asset finance.
  • The CBILS gives the lender (not the business) a Government-backed guarantee for the loan repayments.
  • The business (borrower) remains fully liable for the debt - remember this is a loan, not a grant.
  • Personal guarantees will not be taken for facilities below £250,000.
  • For facilities above £250,000 personal guarantees may still be required but this will be at the discretion of the lender.

Has Rishi come up with a plan to save the economy and stimulate growth? Why not share your thoughts on our Twitter feed …

If you need help to write a business plan and apply for the recovery loan scheme please contact us, we would be happy to help support you with your application.

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