Every business in the UK has been impacted by the effects of coronavirus and the accompanying lockdown restrictions whether for good or ill.
Dale Williams, Partner in the corporate team at BPE Solicitors takes a look at the current support measures in place.
Certain businesses have the fortune to operate in sectors which have seen dramatic increases in demand for their services; online retailers, logistics and technology providers to name but a few, others have been less fortunate. Decreasing sales, lack of footfall and the impact of national and local restrictions has seen many businesses forced to shut or dramatically change the way they operate in an attempt to survive.
With the announcement this week of the new three tier system for local lockdowns, many will be rightly worried about the months ahead. There are however a number of schemes in place (some of which are sector specific) to support businesses during this period:
Coronavirus Business Interruption Loans (CBILS), Bounce Back Loans (BBLS) and Future Fund
CBILS allows SMEs to apply for loans and finance up to £5million which is backed by the government (up to 80%). The loan facility will be available for up to 3 years for overdrafts and invoice finance facilities and up to 6 years for loans and asset finance facilities. For any loan over £30,000 the business will need to prove it was not in financial difficulty on 31 December 2019.
There are over 50 lenders providing loans through CBILS and you can apply using this link.
BBLS allows SMEs to access smaller loans from £2,000 to £50,000 (up to a maximum of 25% of turnover). The loan is for a six-year period with no repayments for the first 12 months but you are unable to apply if you have already applied for a loan via CBILS. Full details on how to apply for this scheme can be found here.
Future Fund is designed to help start-ups who rely on equity investment and are not able to access other government support due to being pre-revenue or pre-profit. An extension has been announced for this scheme which will now close to applicants on 30th November. For details on how to apply to the Future Fund, click here.
For additional information about eligibility for these schemes please visit the links below:
Job Support Scheme (JSS) and Self-Employed Income Support Scheme (SEISS)
CJRS (also known as furlough) will finish at the end of October and will be replaced by JSS. This will allow employees who work at least 33% of their contracted hours to receive a top up from their employer and the Government which will see most employees receive at least 77% of their pay. JSS will run for six months from 1 November 2020 and will be open to all SMEs. Large businesses will need to demonstrate that they have been adversely affected to be able to apply for support. For more information on JSS including caps and how businesses can claim the support, click here for our previous article.
Support for self-employed people via SEISS has also been extended to April 2021.
Businesses in hospitality and tourism have been heavily affected by COVID-19 with many having to close for a significant period of time. With approximately 150,000 businesses and 2.4million jobs in these sectors, organisations will continue to have a reduced VAT rate of 5% applied on food, non-alcoholic drinks, accommodation and admission to attractions until 31 March 2021.
Payment schemes for deferred VAT and Self-Assessment liabilities
Many organisations will have taken advantage of the option to defer tax bills to March 2021 and retain cash within the business. The Government will now allow businesses to pay in full or to spread the bill over eleven equal payments during 2021/2022 as part of the ‘New Payment Scheme’. Self-employed and individual taxpayers who have up to £30,000 of tax liabilities will be able to use HMRC’s ‘Time to Pay’ facility to pay this over an additional 12 months. This is an extension to the existing tax deferral for self-assessment meaning that any tax which was due in July 2020 will not need to be paid in full until January 2022.
Local Restrictions Support Grant (LRSG)
Most recently, additional support has been announced for a business which is open but required to shut for at least three weeks as a result of local lockdown restrictions and occupies a property on which it pays business rates. Eligible businesses, depending on the rateable value of their property, will be able to apply for a cash grant of £1000 or £1500 for each three-week period of closure. Businesses which do not pay business rates (or who have been severely affected because businesses within their supply chain have shut) may also be able to apply for a discretionary grant of up to £1500 from their local council.
For full details of this latest support and eligibility criteria, please click here.
As well as the schemes mentioned above, businesses are able to access other support including reductions on business rates or, if recruitment is on the agenda, financial support for recruiting young people aged 16-24 via the Kickstart scheme.
In such tumultuous times businesses may want to consider reviewing their current structure and finances to ensure they are best placed to maintain a viable business model and protect the core of their operations.
For more information on supporting your business and reviewing the options available to you in terms of government support or reviewing your company structure, contact Dale Williams by email email@example.com or call 01242 248234
Full details of the team and the ways we can support your business can be found at www.bpe.co.uk/services/team/corporate/
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