Government help for business is being put in place, with schemes evolving in real time. Some measures vary across the UK. Generally, see bit.ly/2VdnDrn. For Scotland bit.ly/2VaBnDr Wales bit.ly/2x3zPDm Northern Ireland bit.ly/3c1EFjw.
Loan Schemes
There are now three schemes, all delivered through commercial lenders to support 'long-term viable businesses … respond to cash-flow pressures by seeking additional finance'. Businesses need to approach a lender, and it probably makes sense to try your usual bank first.
- Bounce Back Loans: fast-track scheme for small businesses
- the Coronavirus Business Interruption Loan Scheme (CBILS) for UK businesses with annual turnover up to £45 million bit.ly/34KRewL
- the Coronavirus Large Business Interruption Loan Scheme for UK businesses with annual turnover over £45 million.
Bounce Back loans
These provide 100% government-backed loans covering 25% of business turnover. Minimum loan size is set at £2,000 and the maximum at £50,000. Loans are interest free for the first 12 months, with a repayment holiday for this period. The scheme launched on 4 May, with application online bit.ly/2KGytkP.
CBILS
The CBILS provides access to loans, overdrafts and other finance. Finance is capped at £5 million, with a maximum term of six years for term loans and asset finance. The government covers interest payments for the first 12 months and any lender-levied fees. CBILS cannot be used as well as Bounce Back funding, and applicants must 'self-certify' that their business is adversely impacted by Covid-19.
Criticism of the scheme has brought some changes. The most recent viability tests only require a bank to assess whether a business was viable pre Covid-19, for example, and loans below £250,000 do not require personal guarantees. Any type of business can apply, if generating more than 50% of its turnover from trading activity. There is a quick eligibility checklist here bit.ly/2Xhvjvy.
How do I apply for a loan?
The Bounce Back scheme has a short, standardised online application form. Critically, the aim is to provide loans to businesses 'within days'.
The CBILS entails more of an application process than a conventional loan. Lenders should now, however, be focusing mainly on information you can supply at speed, assessing credit and business viability on the basis of this and their own prior information.
Self-employment Income Support Scheme (SEISS)
Further changes were announced on 29 May, so that two consecutive lump sum grants to support the self-employed and partnerships will now be available under SEISS. The second grant will be the last under the scheme.
What does it do?
The first grant gives a direct cash grant, of up to 80% of profits, covering the three months to May. The maximum payable is £2,500 per month (£7,500 in total). The second grant reduces this support, and is worth up to 70% of profits, capped at a total of £6,570. The grants are taxable and each is paid in one lump sum.
Criteria
The same rules on eligibility apply to both grants. Broadly, you must carry on a trade which has been adversely affected by circumstances relating to coronavirus. You must also have filed all relevant income tax self assessment returns; have traded in the 2018/19 and 2019/20 tax years, and intend to carry on trading in the 2020/21 tax year. Your profits, based on an average of the last three years, must be no more than £50,000, and at least equal to any non-trading income, such as employment income, dividends or rental income. See bit.ly/2VdfgO1.
You can use this online tool bit.ly/3fkiTte to check if HMRC considers you eligible. If it doesn't, you can ask to have this reviewed. Please do talk to us if you have any concerns here.
What do I have to do?
You must confirm that your business has been adversely affected by coronavirus for each grant. If you haven't already claimed the first grant, it is still open for applications up to the closing deadline of 13 July.
The second, final grant will open for applications in August 2020, and you will be able to claim for the second grant even if you haven't claimed the first. Further information on the second grant is due on 12 June 2020.
Rent, rates and property
Commercial tenants across the UK, unable to pay rent because of coronavirus, are given protection from eviction. This is not a rental holiday however, and liability to pay remains. Discussions between landlords and tenants are encouraged. Other help, for example with business rates is also available bit.ly/3dikYnX and bit.ly/2Wo15Vz.