More Covid-19 support coming
...for struggling businesses.
Updated 04/05/20: The Govt has announced a new grant boost for small businesses
On the 2nd of May 2020, another grant boost was announced for small businesses. This additional help comes in the form of a 5% top-up for local business grants for firms currently locked out of the existing business rates relief system.
We’re generally talking about very small businesses here, with fewer than 50 pairs of boots on the ground and fixed property costs to pay. Local authorities are being asked to bump market traders, small charity properties, firms in shared spaces and B&B premises currently paying Council Tax rather than business rates to the head of the queue. Other types of firm won’t necessarily be excluded, but grants are to be awarded at the discretion of the local authority, based on an assessment of need.
The grant payments will come at 3 levels, to a maximum of £25,000. Eligibility won’t be automatic, though. Businesses will have to prove that their income has dropped significantly since the pandemic broke out and restrictions came in.
Full details are yet to be announced, but it’s already been confirmed that grants of £10,000 will be available, with smaller payments being available at local authorities’ discretion.
More updates to follow when further announcements are made.
With many smaller businesses struggling to get quick access to existing COVID-19 support schemes, Chancellor Rishi Sunak announced another lifeline loan system. With loans of up to £50,000 on offer, this could be a valuable short-cut through the obstacle course of previous schemes. Here are the basics:
Unlike previous systems, businesses applying for the new loans won’t have to convince lenders that they’ll still be viable after the COVID-19 crisis is over to qualify. This was proving a particularly high bar to vault for small and micro businesses, given how uncertain things are right now.
The scheme’s aiming to knock down several of the barriers preventing firms accessing funding, with a streamlined, 2-page self-certification form to contend with and a promise of just 24 hours to wait after approval for the money to arrive. The hope is that eliminating the banks’ risk with a 100% guarantee will mean many more businesses can unlock the essential funding needed to survive the pandemic.
Applications for the scheme will be open from the 4th of May 2020, so check back for more updates.
With COVID-19 all over the news right now, things are changing fast for people and businesses all over the world. Social distancing and self-isolation are putting dents in every sector, and there's a lot of worry over how firms will stand up to potentially months of this “new normal”.
The echoes of Chancellor Rishi Sunak's first Budget speech have barely died down and already there have been updates on the support being offered to businesses to help get them through the coronavirus crisis. Here's what you need to know:
The £3,000 one-shot grants that were announced for small businesses with low or non-existent business rates have been upped to £10,000. That's going to pump some significant short-term cash into the veins of around 700,000 firms across the UK. To qualify, you need to be eligible for either Small Business Rate Relief or Rural Rate Relief, and the grants will be handled by local authorities. You shouldn't have to directly apply for the grant, as your local authority should be in touch with you to sort things out.
This move comes on top of the temporary scrapping of business rates for companies in the retail, hospitality and leisure industries. Businesses in those sectors can qualify for up to £25,000 in grant funding if their property's rateable value is between £15,000 and £51,000.
When the Coronavirus Business Interruption Loan system was introduced in the Budget, the government was committed to guaranteeing SME loans of up to £1.2 million. That figure's already been boosted, allowing firms loans of up to £5 million through the British Business Bank. The first 6 months of interest on these loans will be free, and the government will be covering up to 80% of any losses.
To get the loan, you need to be based in the UK and have a turnover of no more than £45 million a year. You'll also have to fit the general criteria for the British Business Bank, which you can find here. The schemes will be offered through all the major banks once the framework's up and running, so talk to your bank or finance provider to get set up.
On the 3rd of April, the business loans scheme was revamped and expanded after it turned out that, despite over 130,000 enquiries being made, fewer than 1,000 had led to loans being approved. The big headline coming out of this is that loans will no longer be denied to firms that haven’t already been rejected for normal commercial borrowing. On top of that, businesses with turnovers as high as £500 million will now be able to get more help, with the government backing loans of anywhere between £45 million and £500 million.
Crucially, the government is putting a stop to banks insisting that business owners risk their homes to guarantee many of the loans being made. Lenders will no longer be able to ask borrowers to put up their own savings or properties to secure loans of up to £250,000. For businesses borrowing more than that, some form or personal guarantee may still be necessary. However, banks won’t be able to insist that borrowers put up their “Principal Private Residence”. Also, any recoveries made will be limited to 20% of the outstanding balance, once the proceeds of business assets have been factored in. It’s also worth noting that no specific cap has been put in the interest being charged. This is still very much a loan, and borrowers will be expected to still to the terms they accept.
Larger businesses will also get some help with their cash flow through the COVID-19 Corporate Financing Facility, which will see the Bank of England basically “buying up” the short-term debts of qualifying firms. You can check the Bank of England site for more on that.
While you're here, take a look at our blog on Sick Pay support for small businesses, and keep checking back for more information.