The government has pledged to do “whatever it takes” to support businesses during the coronavirus outbreak. But what exactly is offered, who is eligible, and crucially, how do you apply? Business journalist Abigail Townsend takes a closer look.

Updated 27 October 2020: Since this article was first published, the support measures available have changed. For the latest information, it’s important to check the government website.

The coronavirus outbreak is causing much of the UK economy to grind to a halt. Rishi Sunak, the Chancellor of the Exchequer, has pledged to do “whatever it takes” to get the country through the crisis, and has announced a £330bn stimulus package of loans and grants intended to support business, especially small and medium sized enterprises (SMEs).

Below we look at what the package includes and how it is likely to work for individual businesses. The situation is developing on a daily basis and so it’s important to check in on the latest government announcements.

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Business rates

A business rates holiday is being introduced for companies operating in certain sectors for the 2020 to 2021 tax year.

Company owners need do nothing to apply: the holiday will be applied automatically to their next council tax bill in April 2020. If local authorities have to reissue the bill automatically to exclude the rate change, they will do this as soon as possible.

Your business will be eligible if it is based in England and is in the retail, hospitality or leisure sectors. Properties that will benefit from the relief will be occupied, and used wholly or mainly as:

  • Shops, restaurants, cafes, drinking establishments, cinemas, live music venues
  • Hotels, guest and boarding premises, self-catering accommodation

Properties used for assembly and leisure will also benefit.

Nurseries that are based in England and pay business rates are also eligible for the holiday, and as with the above sectors, they need do nothing to apply: it will be applied automatically to their next council tax bill in April 2020.

Eligible businesses must be occupied by providers on Ofsted’s Early Years Register, and be wholly or mainly used for the provision of the Early Years Foundation Stage.

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Cash grants

Alongside the rate holiday, the government has pledged £20bn of grants for companies in the retail, hospitality and leisure sectors. Under the Retail and Hospitality Grant Scheme, businesses could be eligible for one of two grants – for £25,000 or £10,000 – provision of which will come via local authorities. Businesses operating within these sectors with a rateable value of between £15,000 and £51,000 will receive the larger grant; those with a rateable value under £15,000 will receive the smaller sum.

For businesses that already pay little or no business rates because of small business rate relief (SBRR), rural relief or tapered relief, there is the Small Business Grant Scheme. This will provide a one-off grant of £10,000 to eligible businesses.

Eligible companies must be based in the UK, already receive relief, and occupy a property.

Your local authority will contact you if you are eligible for any of these grants. The central government will be providing guidance to local authorities about the schemes “shortly”, and we will update the blog when we have more detail. You can find your local authority on the government directory.

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Statutory sick pay (SSP)

All UK-based SMEs with less than 250 employees as of the 28th February, are able to reclaim SSP paid for up to two weeks for sickness absence due to Covid-19. Staff will not need a GP fit note, but employers do still need to keep records – and if they want evidence, workers can either get an isolation note from the NHS 111 online service, or if they have to isolate because they are well but someone in their household has symptoms, they can get a note from the NHS website.

How to apply for the rebate is another matter, however. The scheme is still being developed and while the government has said it is bringing forward the relevant legislation, further details are as yet unknown. Again, we will update this when details become clear.

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Coronavirus Job Retention Scheme - updated 21/5/20

This Government scheme aims to ensure that staff can keep their jobs and are paid, where they would otherwise have been laid off because of the crisis. Under the scheme, HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month.

The furlough scheme will run until the end of October. From August, some furloughed workers may be able to work part-time. Where this happens, the employer may be required to contribute to the cost of the scheme.

On the 20th April, the scheme went live. To access it, companies should designate affected employees “furloughed workers” and notify employees of this change. They then need to submit information about these employees and their earnings to HMRC’s dedicated portal.

More detailed information on the furlough scheme, including the link to apply, can be found on HMRC’s guidance pages.

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Time to Pay

Any business (or self-employed person) who finds themselves in what the government is calling “financial distress” with outstanding tax liabilities can access HMRC’s Time to Pay service.

The first step is to call HMRC’s dedicated helpline on (0800) 0159 559. Eligibility is decided on a case-by-case basis, but to be considered at all, first you must pay tax to the UK government and already have outstanding tax liabilities. If you are OK currently, but worried that you may run into problems, HMRC is currently advising to call nearer the time.

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The Coronavirus Business Interruption Loan Scheme (CBILS)

The most headline-grabbing part of the package, this is a temporary loan scheme which Starling was accredited for on 11th April. The scheme actually launched on 23rd March and is running through the government-run British Business Bank and has no time limits confirmed as of yet.

Under CBILS, the government will provide the accredited lenders with a free guarantee on 80% of each loan, up to a value of £5m, subject to per-lender cap on claims, for up to six years. The idea is that it will give lenders the confidence to continue lending to SMEs, even in the current very uncertain climate.

The government will also cover the first 12 months of interest payments and fees, where applicable, meaning that for the business taking out the loan, the initial repayments will be lower. Nor is it just loans – other types of finance will be supported by the scheme, including overdrafts, invoice finance and other asset finance facilities, dependent on individual lenders.

It is important to remember, however, that while the terms are favourable, the borrower remains 100% liable for the debt. Nor is there any guarantee a loan application will be successful.

To take out a loan, your first port of call should be your existing lender, not the British Business Bank. The government is urging companies to call their lenders as soon as possible to discuss their business plans.

The scheme is now open for applications. Companies are eligible if they are based in the UK with turnover of no more than £45m per annum. They must also operate within an eligible sector; there are a few – including banks, insurers, unions and education providers – that fall outside the scope. Companies must also be able to confirm they have not received State Aid beyond €200,000 (about £184,900 at the time of publication) over the current and previous two fiscal years. More information on eligibility is available on the British Business Bank’s website.

On the 3rd April 2020, the Chancellor announced further measures to assist business.

For SMEs, the CBILS has been expanded to cover all viable businesses impacted by the outbreak, not only those who can’t secure regular commercial financing. Also, lenders will now not be able to ask for personal guarantees on loans under £250,000.

For larger companies, the Government has established the new Coronavirus Large Business Interruption Loan Scheme (CLBILS). This provides a government guarantee of 80% for loans to firms with an annual turnover of between £45 million and £500 million.

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Bounce Back Loans for SMEs updated 20/5/20

The Government’s Bounce Back Loans are designed to offer streamlined emergency aid to small and medium sized businesses who need to access funds quickly.

From 4 May, companies will be able to borrow between £2,000 and £50,000. Companies can apply through a short online form and once accepted, the funds should be with them within 24 hours. The loans are interest free for the first 12 months. The Bounce Back Loans are 100 percent backed by the government, whereas the CBILS loans which are 80 percent Government guaranteed.

Bounce Back Loans are separate from CBILS loans, which enable businesses to borrow larger amounts, up to £5 million. However if you’ve received a loan of up to £50,000 through CBILS, this can potentially be converted into a Bounce Back Loan.

To manage high demand, we’ve opened a BBL interest list. In the first instance, we will be considering applications from established customers using Starling as their primary account. More details on the BBLS.

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Covid-19 Corporate Financing Facility (CCFF)

Under this scheme, the Bank of England will provide funding by buying short-term debt – commercial paper of up to one year maturity – from companies. All non-financial UK incorporated firms are eligible, but the scheme is specifically designed for larger companies and is not intended for SMEs. Firms will need to be able to demonstrate they were in “sound financial health” before the crisis hit; most will need to do that by being rated by at least one of the major credit rating agencies. They will need to have a short-term rating of A3 or above, or a long-term rating above BBB.

They must also have genuine business in the UK (if they are foreign-incorporated), have “significant employment” in the country and be headquartered here. The scheme starts the week commencing 23 March and lasts for a year. Companies wanting to use CCFF should liaise with their banks in the first instance.

The government continues to announce new measures – on Friday the 20th March, for example, Rishi Sunak said he would defer the next quarter of VAT payments, meaning no business will pay VAT from now until June. Businesses will also have until the end of the financial year to repay those bills. It is important to keep checking announcements from the government as well as individual departments including HM Treasury and the Department for Business, Energy, Industrial Strategy, as well as the British Business Bank and the Bank of England. The government has said it will do whatever it takes to support the economy during the pandemic – businesses everywhere should make sure they take advantage.

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Aid for innovative companies

The government has made £1.25 billion available in financial support for innovative small and medium sized enterprises (SMEs) and start-ups. This is made up of two parts:

  • A £500 million investment fund named the ‘Future Fund’, for high-growth start-ups and administered by the British Business Bank. The fund is initially open until the end of September.
  • £750 million for R&D firms channelled through Innovate UK, the government funded national innovation agency.

The scheme will launch in May. As of publication date, no fixed date was given. Read more on aid for innovative companies.

The above is intended as general information and does not constitute advice in any way. You should take independent advice if you have any questions about your specific circumstances.

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