As we are now deep into lockdown many business owners will now be considering what sort of Coronavirus business support is available.
The impact of the Coronavirus is being felt by businesses far and wide.
The Office of National Statistics have released a new weekly publication which measures this impact. Of the 3,642 businesses who responded to the new Business Impact of Coronavirus Survey (BICS):
- 45% reported turnover was “lower than expected” for the period 9th to 22nd March 2020.
- 27% said they were reducing staff levels in the short term.
I’m sure these figures will only increase over the next few weeks.
So what sort of Coronavirus business support is available? This article aims to cut through all the noise and highlight the key points for business owners. We’ll also point you in the right direction for more information.
Two key Coronavirus business support packages
The two main Coronavirus business support packages aim to tackle two key areas:
- Help with costs, in particular staff wages via the not so catchy ‘Coronavirus Job Retention Scheme’ and
- Help with access to finance via the even less catchy ‘Coronavirus Business Interruption Loan Scheme’.
Staff wages
Unlike in the US where they have tried to protect people’s income, the UK has chosen to try and protect people’s jobs by stepping in to support wages if a business is struggling.
You’ve probably heard the headlines. If your business qualifies you can claim 80% of your employees’ wages, up to a maximum of £2,500. You can choose to top up your employee’s salary but you do not have to.
In order to claim you must have:
- created and started a PAYE payroll scheme on or before 28 February 2020
- enrolled for PAYE online - this can take up to 10 days
- a UK bank account
The government’s own website sets out the process for the various different types of employee and what type of pay can be claimed for.
The key points are as follows:
- Employees must be classed as Furloughed and during this time cannot carry out any work for the business.
- If you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme.
- Company Directors – As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. However this does mean you cannot work on or in the business apart from to fulfil the statutory obligations you owe to your company.
- If you have multiple businesses or more than one job you can be furloughed for each business/job.
The Federation of Small Businesses (FSB) have put together a useful webinar which goes through all of the different types of Coronavirus business support. You can catch the recording anytime.
Access to finance
If your business is sound but just needs a little help getting through the next couple months whilst new orders/customers are zero then you could apply for a loan through the ‘Coronavirus Business Interruption Loan Scheme (CBILS)’.
Businesses can claim up to £5 million on a term up to 5 years. The government will cover all interest payments and any lender levied fees during the first 12 months. They will also guarantee the loan up to 80% meaning businesses that previously struggled to provide appropriate guarantees should now pass.
The CBILS is managed by the British Business Bank where there are 40 approved lenders and partners from well-known high street banks to challenger banks.
In order to qualify for a loan under the scheme your business must:
- Be UK-based in its business activity
- Have an annual turnover of no more than £45 million
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
- Self-certify that your business has been adversely impacted by the coronavirus (COVID-19).
Other Coronavirus business support
Another smaller helping hand from the government includes the ability to defer VAT payments for 3 months.
If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:
- defer the payment until a later date
- pay the VAT due as normal
As we have all experienced, the response to the Coronavirus is changing at a rapid pace as we learn more about it.
The government have said they will do all they can to support businesses and jobs so we expect changes as these schemes are refined and possibly more support to come.
We will get through this and many businesses will use this as an opportunity to implement new technology and become more efficient.
If you are concerned about the uncertainty impacting your business and therefore personal wealth then please get in touch with us. We deal with a number of business owners from a range of sectors so it’s likely we have already come across a similar situation to what you find yourself in.
For now, stay safe.
Find out more about our business planning services and take advantage of our free 15-minute call. You can speak to a Chartered Financial Planner who will listen to your situation, give you an outline of what you need to consider and guide you in the right direction.
Risk warning:
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.
