As the Coronavirus (COVID-19) continues to spread in the UK, increasing numbers of businesses have been adversely affected, impacting their cash flow and placing some at risk of insolvency.
In the Budget, several measures were announced, as well as pre-existing initiatives for businesses funding. In this article we discuss some of these in further detail.
1. ‘Time to Pay’ for business tax
The government will assist businesses and self-employed individuals in financial distress and with outstanding tax liabilities through support in settling their tax affairs.
‘Time to Pay’ gives businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.
Each case must be agreed on an individual basis by contacting the HMRC helpline on 0800 0159 559.
During the coronavirus outbreak, the usual 3.5% annual interest on deferred tax payments will be waived.
Where applicable, it is important that businesses apply in plenty of time and agree upfront with HMRC before a payment deadline.
2. Support for businesses borrowing up to £5m
A new measure announced at the Budget 2020 is the Coronavirus Business Interruption Loan Scheme’ (CBILS) which will offer more attractive terms for both businesses and lenders during the COVID-19 outbreak.
Once in place, CBILS will facilitate business finance to smaller businesses that are viable but unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. This will not only be for business loans and will also include term facilities, overdrafts, invoice finance facilities and asset finance facilities.
Details of the scheme and eligibility are currently being confirmed by the British Business Bank. However, initial suggestions are that eligible businesses will be those:
- Under £41m turnover per annum
- With a sound borrowing proposals but insufficient security
- Not be in receipt of de minimis State aid beyond €200,000 in the current and previous two fiscal years
- Not in a very small number of restricted or ineligible sectors
- Using a finance provider (or broker working on their behalf) who is a partner of the British Business Bank listed below:
- ABN AMRO Commercial Finance
- ART Business Loans
- Bank of Ireland (Northern Ireland)
- Bank of Scotland
- BRS Business Loans
- Business Enterprise Fund West North Yorkshire
- Calverton Finance
- Chamber Acorn Fund Humber
- Clydesdale Bank
- Compass Business Finance
- County Asset Finance
- Coventry Warwickshire Reinvestment Trust
- Danske Bank Northern Ireland
- DSL Business Finance Scotland
- Enterprise Answers Cumbria
- Finance for Enterprise (Donbac)
- Enterprise Loans East Midlands
- GC Business Finance
- Genesis Asset Finance
- Hitachi Capital Business Finance
- Let’s Do Business Group
- Lloyds Bank
- Merseyside Special Investment Fund
- Metro Bank
- Newable (formerly GLE)
- Robert Owen Community Banking
- Skipton Business Finance
- South West Investment Group (SWIG)
- The Royal Bank of Scotland
- UK Steel Enterprise (UKSE)
- Ulster Bank
Further details are expected shortly, including how to apply for this support. We are in touch with several of the above finance lenders and can put you in touch with them should you need assistance.
3. Business rates holiday for retail, hospitality and leisure businesses
A 12-month business rates holiday for all retail, hospitality and leisure businesses in England has been announced. Also a £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000. To arrange this, you should contact your local authority. There will also be funding up to £10,000 and business rates support for businesses in other sectors currently on the Small Business Rates Relief (SBRR), with further details on this to be confirmed in early April.
If you are a business included in the business rates holiday there is no action needed. It 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 are expected to do this as soon as possible.
Key Coronavirus business risk areas
- Demand: Decreasing footfall and potential lockdown of regions resulting in reduced or no sales;
- Employee sick days: Coronavirus breakout in the work place or enforced shut down leading to employees off work and/or public relations issues;
- Supplies: increasing wholesale costs, delays and lack of availability.
4. Government cash grants of £3,000
The government has announced small businesses that already pay little or no business rates will be eligible for a one-off coronavirus grant worth up to £3,000 to help them meet their business costs.
The grants will be delivered by local authorities, but it is not yet clear how businesses can access these cash grants.
5. Sick pay costs can be reclaimed
The government will support small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related Statutory Sick Pay (SSP) by refunding eligible SSP costs. The eligibility criteria for the scheme include:
- Emergency legislation is being passed that means employees suffering from COVID-19, or self-isolating, will be entitled to SSP from day 1, rather than observing the usual 3 waiting days;
- The refund for employers will be limited to two weeks per employee;
- 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;
- Employers should maintain records of staff absences, but should not require employees to provide a GP fit note;
- The eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force.
Repayment of employee sick days will not be through the payroll software. The Government is yet to set up a repayment mechanism so employers may need to wait several months yet before claims can be submitted and for the first reimbursements to be made. Therefore, good recordkeeping for making an eventual claim is essential.
6. Existing funding and grant initiatives, such as the Buckinghamshire Business Growth Grant
It is worth reminding you that there are various funding and support initiatives across the UK which you can find out about and apply on the .gov website here.
Locally to us, the Buckinghamshire Business Growth Grant, provides grant funding up to the value of £5,000 available to invest in projects to help local businesses with up to 249 employees to grow. This can include funding for initiatives such as website development, re-branding, marketing, software or consultancy. Further details are on the .gov website here.
7. Using the Enterprise Investment Scheme (EIS) to raise finance for your business
The Enterprise Investment Scheme allows qualifying companies access to equity investment from new and, in some cases, existing shareholders. The shareholders obtain potentially attractive tax breaks, either income tax or CGT reliefs.
We are able to provide advice on whether this is a suitable option, review whether you might qualify and guide you through the implementation of an EIS which is suitable for your circumstances.
Speak to your advisor
It is important if your business is experiencing difficulties that you assess your options at the earliest opportunity before it leads to a more critical liquidity issue.
We will be contacting clients and urge any who are concerned to speak to their banks, trade associations and our team as soon as possible so that they can get specific advice or guidance.