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During this difficult period, many businesses across the country are being impacted by COVID-19. In response to this, the Government has announced various funding support mechanisms to reduce the impact of Coronavirus on small and medium sized businesses (SMEs).
But what does all of this mean and how do businesses access this support? Here we help you understand the support available and how you can access this.
The package of measures to support businesses includes:
- A Coronavirus Bounce Back Loan
- A Coronavirus Self-employment Income Support Scheme
- A Coronavirus Job Retention Scheme
- Deferring VAT and Income Tax payments
- Statutory sick pay relief
- A 12-month business rates holiday for all retail, hospitality and leisure businesses in England
- Small business grant funding
- The Coronavirus Business Interruption Loan Scheme (CBILS)
- The Coronavirus Large Business Interruption Loan Scheme (CLBILS)
- Support for larger firms through the Covid-19 Corporate Financing Facility (CCFF)
- The HMRC Time To Pay Scheme
- Support for business in Scotland, Wales and Northern Ireland
- Protection from eviction for commercial tenants
CORONAVIRUS BOUNCE BACK LOAN SCHEME (BBLS)
This scheme will help small and medium-sized businesses affected by coronavirus (COVID-19) to apply for loans of up to £50,000. This scheme is now available having launched on 4 May 2020.
The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and £50,000. 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. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.
The scheme will be delivered through a network of accredited lenders.
BBLS features
The Bounce Back Loan Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government will cover interest payable in the first year.
- Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
- 100% guarantee: The scheme provides the lender with a government-backed, full guarantee (100%) against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt.
- Interest rate: The government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest.
- Interest paid by government for 12 months: The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
- No principal repayments for first 12 months: Borrowers will not have to begin principal repayments for the first 12 months, thereafter capital will be repaid on a straight-line basis.
- No guarantee fee for businesses or lenders to access the scheme
- Finance terms: The length of the loan is for six years but early repayment is allowed, without early repayment fees.
- No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.
The SME FAQs page on the BBB website, outlines the differences between this new scheme and the CBILS initiative alongside further information about eligibility and how to apply.
Who is eligible?
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
You are not eligible to apply:
- if you are a bank, insurer or reinsurer (but not insurance brokers), a public-sector body, a grant funded further-education establishment, a state-funded primary or secondary school
- if you’re already claiming under the Coronavirus 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.
What do I need to do?
The Bounce Back Loan scheme will launch on 4 May 2020 and more details of how to apply will be confirmed then.
CORONAVIRUS SELF-EMPLOYMENT INCOME SUPPORT SCHEME (SEISS)
Use this scheme if you’re self-employed or a member of a partnership in the UK and have lost income due to coronavirus (COVID-19).
If you are self-employed and have suffered a loss in income, a taxable grant will be paid, worth 80% of your profits up to a cap of £2,500 per month.
Initially, this will be available for three months in one lump-sum payment and will start to be paid from the beginning of June.
It is open to those who were trading in the last financial year, still trading now, and planning to continue doing so this year.
HMRC will calculate the size of the grant using the average monthly profits from self-assessment tax returns submitted for 2016-17, 2017-18 and 2018-19
Who is eligible?
You can claim if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Self-Assessment tax return for the tax year 2018 to 2019
- traded in the tax year 2019 to 2020
- are trading when you apply, or would be except for coronavirus
- intend to continue to trade in the tax year 2020 to 2021
- have lost trading profits due to coronavirus
You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will as usual use a risk-based approach to compliance.
Your trading profits must also be no more than £50,000 and more than half of your total income for either: the tax year 2018 to 2019
the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
Those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.
What do I need to do?
The scheme will initially be open for three months and is now operational.
You should contact HMRC to check your eligibility. If you are eligible, you’ll be given a date that you can make your claim from.
You can find more information here.
The online service to claim is now available. If HMRC have confirmed you are eligible you can make your claim from the date they gave you.
CORONAVIRUS JOB RETENTION SCHEME
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.
This is a temporary scheme which was initially in place for 4 months starting from 1 March 2020. However, on 12th May, Chancellor Rishi Sunak announced the extension of the scheme to October 2020.
Mr Sunak confirmed that employees will continue to receive 80% of their monthly wages up to £2,500, but he said the government will ask companies to “start sharing” the cost of the scheme from August. The Chancellor said that from August, the scheme would continue for all sectors and regions of the country but with greater flexibility to support the transition back to work.
Employers currently using the scheme will then be able to bring furloughed employees back part-time. Further details on the extension of the scheme are likely to be provided soon.
Who is eligible?
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities. You must have:
- created and started a PAYE payroll scheme on or before 19 March 2020
- enrolled for PAYE online
- a UK bank account
For more detailed guidance on the Coronavirus Job Retention Scheme visit gov.uk
What do I need to do?
To access the scheme, you will need to:
- designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will be setting out further details on the information required)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.
You can calculate how much you will be able to claim here at gov.uk
Claim for wage costs through the Coronavirus Job Retention Scheme.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
DEFERRING VAT AND INCOME TAX PAYMENTS
The Government has also announced that it will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
VAT
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
Who is eligible?
All UK VAT registered businesses that have a VAT payment due between 20th March 2020 and 30th June 2020 are eligible.
What do I need to do?
You have the option to:
- defer the payment until a later date
- pay the VAT due as normal
Find out how to defer your VAT payment.
VAT refunds and reclaims will be paid by the Government as normal.
INCOME TAX
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
Who is eligible?
You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
The deferment is optional. If you are still able to pay your second payment on account on 31 July you may do so.
What do I need to do?
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.
During the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.
If you’re in temporary financial distress because of COVID-19 more help is available from HMRC’s Time to Pay scheme.
STATUTORY SICK PAY RELIEF
The government has announced that people who cannot work due to COVID-19 and are eligible for Statutory Sick Pay (SSP) will get it from day one, rather than from the fourth day of their illness – and the government intends to legislate so that this measure applies retrospectively from 13 March 2020.
SSP will be payable to people who are staying at home on government advice, not just those who are infected, from 13 March 2020 – employers are urged to use their discretion about what evidence, if any, they ask for.
Employers with fewer than 250 employees will be able to reclaim SSP for employees unable to work because of COVID-19. This refund will be for up to 2 weeks per employee.
Who is eligible?
The eligibility criteria for the scheme will be as follows:
- The refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
- Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.
- The eligible period for the scheme will commence on 13th March 2020.
What do I need to do?
- A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.
- Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.
- If your business decides evidence is required, your staff members with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
- The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible
12 MONTH BUSINESS RATES HOLIDAY
The Government will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
Who is eligible?
You are eligible for the business rates holiday if:
- your business is based in England
- your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest & boarding premises and self-catering accommodation
What do I need to do?
There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.
You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.
CASH GRANTS
The government announced on 17 March 2020 that it is increasing grants to small businesses that already pay little or no business rates because of Small Business Rate Relief (SBBR) or rural rate relief, from £3,000 to £10,000. They are also providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.
Cash grants for retail, hospitality and leisure businesses
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.
Who is eligible?
You are eligible for the grant if:
- your business is based in England
- your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest and boarding premises and self-catering accommodation
What do I need to do?
You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
Guidance for local authorities on the scheme will be provided shortly by the Government.
If you have any enquiries on eligibility for, or provision of, the reliefs and grants you should direct these to your relevant local authority.
Support for nursery businesses that pay business rates
The Government is also introducing a business rates holiday for nurseries in England for the 2020 to 2021 tax year.
Who is eligible?
You are eligible for the business rates holiday if:
- your business is based in England
Properties that will benefit from the relief will be hereditaments:
- occupied by providers on Ofsted’s Early Years Register
- wholly or mainly used for the provision of the Early Years Foundation Stage
What do I need to do?
There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible.
You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.
Further guidance for local authorities has been published in the nursery discount guidance.
Small Business Grant Scheme
The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
Who is eligible?
You are eligible if:
- your business is based in England
- you are a small business and already receive SBBR and/or RRR
- you are a business that occupies property
What do I need to do?
You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
Guidance for local authorities on the scheme will be provided shortly.
If you have any enquiries on eligibility for, or provision of, the reliefs and grants you should direct these to your relevant local authority.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, has launched to support primarily small and medium sized businesses to access bank lending and overdrafts. The Government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The Government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
The British Business Bank’s CBILS facilitates business finance to smaller businesses that are viable but are unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. It is important to note that the borrower always remains 100% liable for the debt.
In this situation, CBILS provides the lender with a government-backed 80% guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. Essentially the government is acting as a loan guarantor to help banks get funds out to businesses with undue delay. The government will not charge businesses or banks for this guarantee.
On 3rd April the Government announced changes to the business interruption loan scheme which will mean more businesses are able to access financial support during the lockdown.
Previously, government-backed loans for small businesses were only available to firms that had been turned down for a commercial loan from their bank.
Following the changes to the scheme, applications will not be limited to businesses that have been refused a loan on commercial terms. However, the Treasury did not put in place restrictions on the interest rates that banks can charge for loans.
Who is eligible?
To be eligible for the funding, businesses must meet the following criteria:
- Be UK based, with turnover of no more than £45 million per year
- Your business meets the other British Business Bank eligibility criteria
An approved lender can use CBILS to help a borrower access from £1,000 to £5 million. Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.
View the quick eligibility checklist.
What do I need to do?
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.
The scheme is now available.
View the CBILs FAQs for businesses.
CORONAVIRUS LARGE BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
Larger firms with a turnover of up to £500m will also be eligible for more help via the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
The Scheme will offer government-backed loans of up to £25m to firms with revenues of between £45m and £250m. Firms with a turnover of more than £250 million will be able to apply for up to £50 million of finance.
This scheme will launch on Monday 20 April 2020.
The Scheme will be available through a series of accredited lenders, which will be listed on the British Business Bank website. The government will provide lenders with an 80% guarantee on individual loans. This will give banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.
This scheme allows lenders to support businesses that were viable before the coronavirus outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term.
Who is eligible?
You’re eligible if:
- your business is based in the UK
- your business has an annual turnover of over £45 million
- you can self-certify that your business has been adversely impacted by coronavirus
- your business has not received a facility under the Bank of England’s COVID-19 Corporate Financing Facility (CCFF)
You must also have a borrowing proposal which the lender:
- would consider viable, if not for the coronavirus pandemic
- believes will enable you to trade out of any short-term to medium-term difficulty
Exceptions
The following businesses are not eligible to apply:
- credit institutions, insurers and reinsurers (but not insurance brokers)
- building societies
- public-sector bodies
- further-education establishments, if they are grant-funded
- state-funded primary and secondary schools
Further detail on eligibility will be confirmed later this month.
What do I need to do?
The scheme will launch on Monday 20 April. The Scheme will be available through a series of accredited lenders, which will be listed on the British Business Bank website.
Once the scheme has launched, there is likely to be a big demand for facilities. You should consider applying via the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquiries due to coronavirus.
SUPPORT FOR LARGER FIRMS THROUGH THE COVID-19 CORPORATE FINANCING FACILITY (CCFF)
Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
Who is eligible?
All non-financial companies that meet the criteria set out on the Bank of England’s website are eligible.
What do I need to do?
The scheme is now available for applications.
More information is available from the Bank of England.
TIME TO PAY (HMRC)
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 service.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. Time to Pay is a service offered by HMRC, to spread tax payments (PAYE, VAT, Corporation Tax) over a period of time (usually 3 – 12 months).
Who is eligible?
You are eligible if your business:
- pays tax to the UK government
- has outstanding tax liabilities
What do I need to do?
If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.
If you’re worried about a future payment, you should call HMRC nearer the time.
SUPPORT FOR BUSINESSES IN SCOTLAND, WALES AND NORTHERN IRELAND
Because some elements of business support are devolved, the measures you can access may differ if your business is in Scotland, Wales or Northern Ireland.
View the latest guidance on coronavirus for businesses in Scotland.
View the latest guidance on coronavirus for businesses in Wales.
View the latest guidance on coronavirus for businesses in Northern Ireland
OTHER OPTIONS
Alongside the above, there is also the option of exploring more mainstream sources of finance, such as:
- Bank Overdrafts
- Business Credit Cards
- Invoice Finance
- Merchant Cash Advance
You can also find out what support your Business Representative Organisation or Trade Association offers and there are a host of public bodies, organisations and charities that have produced additional resources that may be useful.
COMMERCIAL INSURANCE
Most commercial insurance policies are unlikely to cover pandemics or unspecified notifiable diseases, such as COVID-19.
However, those businesses which have an insurance policy that covers government ordered closure and pandemics or government ordered closure and unspecified notifiable disease should be able to make a claim (subject to the terms and conditions of their policy).
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.
Notifiable diseases
Notifiable diseases are certain infectious diseases that registered medical practitioners have a statutory duty to notify the ‘proper officer’ at their local council or local health protection team about when they come across a suspected case.
The government keeps an updated list of notifable diseases. On 5 March 2020, the government added COVID-19 to its list of notifiable diseases.
Many insurers use diseases on this list as triggers for the activation or exclusion of insurance cover. For example, insurers’ policies that cover notifiable diseases will typically only cover a specific subset of notifiable diseases (such as Cholera or Anthrax) that the insurer will reference in the policy documentation. These policies will exclude any notifiable disease not on the insurers list, as well as future/unknown diseases (such as COVID-19). The price that the insurer charges for the policy is modelled against the risk posed by this set list of diseases.
Unspecified notifiable diseases
Some businesses will have purchased add-ons for their insurance that cover for ‘unspecified notifiable diseases’. These policies effectively cover any disease listed as a notifiable disease, enabling the business to claim for losses for all notifiable diseases as well as from diseases that are unknown at the point the policy is written.
The effect of the government adding COVID-19 to its list of notifiable diseases is to ensure that businesses with unspecified notifiable disease cover are able to make a claim – subject to the terms and conditions in their policy. For example, someone infected with COVID-19 may need to have been on the premises.
Government ordered closure
The government asked a number of different businesses and venues to remain closed from 21 March 2020 onwards.
Insurers have agreed that this advice is sufficient for businesses covered for COVID-19 losses to make a claim (if the only barrier to them making a claim was a lack of clarity on whether the government had ordered businesses to close). As such, intervention by the police or any other statutory body is no longer required to trigger cover in the current circumstances.
However, most businesses’ commercial insurance policies (including for denial of access) are unlikely to offer cover for COVID-19. Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.
Event coverage
Businesses with event cancellation policies that include unspecified notifiable disease extensions should be able to make a claim for the necessary and unavoidable cancellation, abandonment, curtailment, postponement and disruption of their event for reasons beyond the control of organisers and participants (subject to the other terms and exclusions of their policy).
Insurance for major events is often bespoke to the specific event, so businesses are encouraged to check the terms and conditions of their specific policy and contact their insurer or broker.
PROTECTION FROM EVICTION FOR COMMERCIAL TENANTS
Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction.
These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June.
There is the option for the government to extend this period if needed.
This is not a rental holiday. All commercial tenants will still be liable for the rent. Commercial tenants are protected from eviction if they are unable to pay rent.
Who is eligible?
All commercial tenants in England, Wales and Northern Ireland are eligible.
What do I need to do?
The change will come into force when the Coronavirus Bill receives Royal Assent. No action is required.
Stay up to date
We will continue to update the information in this blog as the situation evolves and further Government guidance is issued on eligibility and how to access this range of financial support measures.
We’ll also continue to provide updates on what the team at Yü Energy are doing to help our customers’ business utilities keep running smoothly and what you can do to stay on top of your business energy and water costs.
We have also partnered with business finance experts, Optimum Commercial, to offer friendly, straightforward support to identify the best financial options for your business. If you would like more information then visit our Financial Support page.
You can find more information at yuenergy.co.uk or on our helpful FAQs page.