As the Prime Minister last night announced what has become known as ‘lockdown’, here’s what we know so far on what support is available to business, and crucially, where we need more detail.
All of these measures do have specific conditions applicable to them, but we’d like you to have them in mind.
Things we know:
Coronavirus Business Interruption Loan Scheme
- The temporary Coronavirus Business Interruption Loan Scheme will support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
- The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
- The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders (there are 40 registered ranging from high street banks to niche lenders), backed by the government-owned British Business Bank.
- The facility will only be available if you cannot get traditional/mainstream funding.
- Talking to banks, your current bank is the best bet, with banks unlikely to deal with applications for non-customers.
- You will need to have everything you would need for a formal bank application like a cash flow forecast of how you can afford to pay back the loan.
If you are considering the above, please talk to us and we can help you with the process. This is a loan and will of course give your business access to funding but is also debt needing repayment. We also expect it to only be accessible for ‘normal’ purposes and not simply for the provision of cash flow support through the current situation, although this needs clarification.
Time to Pay arrangements
- HMRC has set up a dedicated line to help support businesses who are unable to meet their payments as they fall due.
- Always be on the front foot with HMRC and be up front with what is needed.
The number is 0800 0159 559. We have already supported a number of clients already and we are seeing HMRC be agreeable to most reasonable requests.
- No VAT payments for business between 20 March 2020 until 30 June 2020. Payments will be deferred and need to be filed by 31 March/ 5 April 2021 instead.
No specific action needed here – file your return as normal but if you cannot pay the VAT, then you simply do not do so.
Statutory Sick Pay (employing less than 250 people)
- The ability to pay the employee Statutory Sick Pay from day 1 for Covid-19 issues, with two weeks refunded from HMRC.
- Business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
- 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. Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000. Businesses in these sectors with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.
- Additional relief for Nurseries.
Dealt with via your local authority. If you are not in the above category, still call your authority to see what they can offer. We have seen many businesses outside the criteria above be able to defer their rates bill for at least three months.
Self Employed (not Directors of Ltd Co’s)
- For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
No action needed – this is automatic.
Things we need more detail on (desperately)
Coronavirus Job Retention scheme
- The Government paying 80% of wages for furloughed employees. We have no detail on what this measure will look like and any details. We understand this is perhaps the single most important measure to business and understanding what it is, how it works and who it can apply to are still unknown. We do know it will be dated from 1 March and the first repayment to employers will be 30 April, but other than that, details are to follow.
- Before you take any action on this, seek HR Advice! This is so easily over looked but an employee tribunal could be way more expensive!
- There is no detail on how self-employed individuals will be supported at this moment. We know groups are lobbying hard for this.
Do not forget….
Traditional things in times of business difficulty
- Can you claim any tax credits for Research and Development? Consider completing those projects early.
- Build relationships with customers and suppliers. People will remember how you act during the tough times.
- Have a working cash flow model so you can plan your resources – please talk to us, we can help you set up and monitor a rolling cashflow model.