The government recently announced a state-backed loans programme and a package of tax breaks and other measures protect businesses affected by the fallout from the virus. This was upgraded in a conference on 20 March that confirmed that all cafes, bars, pubs and restaurants must now close their doors to the public. From 23 March, all non-essential shops will also be closed.
Here, we break down the details of the new government support available to small businesses, as well as programmes that were set up before the virus outbreak and are still relevant.
In this article, you'll find:
What new government finance is available?
What new measures are live already?
What new measures are coming soon?
Support for R&D and innovation
Support for new businesses and startups
What else is available?
How iwoca can help
What new government finance is available?
Coronavirus Business Interruption Loan Scheme
The largest of the new funding measures is the Coronavirus Business Interruption Loan Scheme (CBILS), which will be delivered via the British Business Bank (BBB). The sceme was announced on 11 March as £1bn of government-backed loans and expanded on 17 March to include loans up to £5m.
The scheme is now live and businesses are urged to contact their business lender for information on how to apply. There is also a FAQ page (PDF) for SMEs.
What finance is available?
The CBILS enables businesses to gain access to business loans, invoice finance, overdrafts and asset finance.
Term loans and asset finance agreements are available for up to six years. The terms for overdrafts and invoice finance facilities are up to three years. Loans of less than £250,000 are available on an unsecured basis.
How is it specific to coronavirus?
For businesses: the first 12 months of interest are covered by government (upgraded from six months) to help SMEs recover from the impact of the virus outbreak
For lenders: the government gives a guarantee for 80% of the loan to mitigate the risks of lending amidst coronavirus uncertainty
Which businesses are eligible?
Eligibility information is available now (PDF). In short, the business must:
Be based in the UK and with annual turnover or no more than £45m
Have a borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty.
How can I apply?
Speak to your bank, or any other of the 40+ accredited lenders.
Will Approved be able to offer this?
Yes, we have several lenders who are able to offer this product, as a broker we will be able to position you with the best deal possible.
What other new measures are live now?
VAT holiday
The next quester of VAT payments will be deferred, so no business in the UK will be required to pay VAT covering the period from now until mid-June. All businesses will until the end of the financial year to repay those bills.
HMRC Time To Pay Scheme
Small and medium-sized businesses who can’t afford to pay their tax bills can ask HMRC for a “time to pay” agreement to suspend debt collection. All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs. During the pandemic, the usual 3.5% annual interest on deferred payments will be scrapped.
Each individual or business will be assessed on a case by case basis and you can apply by calling HMRC on 0800 0159 559.
Support for businesses that pay little or no business rates
The Small Business Rate Relief (SBBR) and Rural Rate Relief (RRR) are pre-existing schemes that around 700,000 businesses in England are eligible for.
You can call your local authority to see if you’re eligible for this relief.
Beyond that, the government has set aside an additional £2.2 billion for local authorities to support the businesses that already pay little or no business rates through these schemes. This will result in a one-off grant of £10,000 for businesses eligible for SBRR or RRR. The funding will not be available until April, but it’s worth checking with your local authority now to see if you're eligible.
Support for businesses in the retail, hospitality and leisure industries
Due to the impact on the retail, hospitality and leisure industry, the government is introducing a business rates holiday for the sector spanning the 2020 to 2021 tax year. 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.
Typically your local council will apply the business rates discount automatically, but it's worth checking their website to confirm the process and timelines. Futher guidance for local authorities on the business rates holiday will be published by 20 March, according to the government.
Universal Credit for self-employed people
The government has suspended the minimum income floor for self-employed people, allowing people who work for themselves full access to Universal Credit at an equivalent rate to Statutory Sick Pay for employees. Universal Credit itself has been expanded, with an additional £1,000 a year added to the standard allowance for the next 12 months.
What new measures are coming soon?
Government support for wages A new government grant – live before the end of April – will cover 80% of the salary of retained workers for businesses, up to a limit of £2,500 a month. This scheme will be available for all employers and cover wage overheads backdated to March 1st. The period of cover will be least three months (until the end of May) and there is no set limit on how much funding is available from the scheme.
Statutory Sick Pay Relief for SMEs
New legislation will soon be put in place to allow SME businesses and employers to reclaim any Statutory Sick Pay (SSP) they’ve paid for absence due to sickness from the COVID-19 coronavirus.
At the moment, this refund will cover up to two weeks Statutory Sick Pay per eligible employee who has been off work because of COVID-19.
Employers with fewer than 250 employees will be eligible
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 and payments of SSP, but employees will not need to provide a GP note
This legislation is expected to be passed shortly and is likely to be backdated to 13 March 2020
COVID-19 Corporate Financing Facility The new COVID-19 Corporate Financing Facility will allow the Bank of England to buy short term debt from larger companies. It is designed to help businesses affected by the short-term funding squeeze, and enable them to finance short-term liabilities.
The government and Bank of England have stated that all UK businesses are eligible.
However, the scheme is designed for larger companies, so there may be restrictions around annual revenues or business size. The scheme will be available early in week beginning 23 March 2020 with information about how to access the scheme available here soon.
Financial support for R&D and innovation
Innovate UK Smart Grants This government-backed funding competition went live in January and though it may not be applicable to all, it does enable some businesses the “opportunity to apply for a share of up to £25 million to deliver ambitious or disruptive R&D innovations that can make a significant impact on the UK economy.”
The competition is open now and closes on 22 April. You can apply here.
R&D Tax Credits If your business is working on an innovative science or technology project, you could be eligible for tax relief. In order to benefit from this scheme, the R&D project must relate to your company’s trade and be attempting to overcome a problem that could not easily be solved by a professional in your field. On top of these eligibility criteria, your business will need to have 500 staff or less and a turnover of under £92m (€100m).
If you meet these criteria, SME R&D relief could allow you to deduct an extra 130% off qualifying costs from your yearly profits.
For more information and to apply, visit the government page on R&D relief.
Patent Box (tax relief on profits from patented inventions)
In order to support innovative SMEs, business owners with patented inventions can apply to this government scheme in order to pay a lower amount (10%) of Corporation Tax. To be eligible for the Patent Box, your business must profit from a patented invention granted by an approved body (see full list here), and actively contribute to developing the patented product.
For more detailed information on this scheme, click here.
Financial support for new businesses and startups
New Enterprise Allowance If you’re just starting out as a business owner, the New Enterprise Allowance (NEA) could be a good way to get your project off the ground. The government scheme offers financial support of up to £1,274 per week for 26 weeks, along with mentoring services and workshops. The scheme seeks to reward those with ambitious and innovative business proposals.
In order to be eligible for NEA, you or your partner must be 18 or over and receive either Universal Credit, Jobseeker’s Allowance or Employment and Support Allowance. Alternatively, if you receive Income Support you could also be eligible.
To get started with NEA you’ll need to speak to a Jobcentre Plus work coach who’ll chat through your business idea with you, and help you work out if you’re eligible.
For more information, visit the NEA page here.
The Start Up Loan The Start Up Loans Company was set up to access affordable finance and mentoring support. A subsidiary of the BBB, it delivers the Government’s Start Up Loans programme – a platform designed to help new and early-stage UK businesses.
New companies can apply for a Start Up Loan of £500 to £25,000, which is an unsecured personal loan backed by the government. Applicants can get free support and guidance on business plans, and successful applicants get up to 12 months of free mentoring. You can apply now on the Start Up Loans website.
The Prince’s Trust
The Prince’s Trust specialises in working with young entrepreneurs to turn their business ideas into a reality. Aimed at 18-30 year-olds, the charity offers start-up business loans of up to £5,000 at 6.2% APR representative, meaning you could get an injection of capital at a competitive rate. On top of this, the team is also available to give advice to those new to owning a business or those in need of assistance. They offer advice on budgeting, tax and insurance queries, and even offer start-up business grants in special circumstances.
For more information, visit their business loans page.
What else is available?
Finance support for your business The gov.uk website has a tool for locating government-backed support and finance for business, which can be searched by sector, region, support type and the stage and size of your business.
There are more than 171 schemes in the database, so it’s well worth exploring and applying to relevant programs and platforms directly.
Pay it forward Enterprise Nation and Crowdfunder have teamed up to launch the #PayItForward campaign, which allows businesses to set up a crowdfunding page for free. The project is a really easy way for businesses to organise voucher schemes that enable them to get cash from their loyal customers now, in exchange for goods or services down the line.lly How Approved can help Now, as ever, we are committed to making finance accessible to UK small businesses. Our cash flow loan products are working capital solutions built specifically for the challenges of running small businesses. For more than eight years, our customers have used it to overcome unexpected costs and provide liquidity in times of uncertainty.
Find out how we can help your business by giving us a call or applying online. Existing customers can contact their account manager to discuss additional funding. If you're not an iwoca customer but are interested in learning more, call us on 01908 429888 or apply online. Our application takes five minutes and, as a responsible lender, we take a 360-degree view of a business' performance. This helps us to offer a solution that is affordable to your circumstances.
Once approved, customers can transfer as much as they need to their bank account, and the funds will typically be in your account in hours. We only charge interest for the days you have the money and there are no early repayment fees.
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Note: Information on this page has been reproduced from one of our lender parters, iwoca.