Coronavirus: Financial Support for SMEs

Job Retention Scheme (JRS)

UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. You can find out more in our dedicated post on the scheme here.

A statutory sick pay relief package for SMEs for sickness absence due to COVID-19

Details:

• 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. This refund will cover up to 2 weeks of statutory sick pay per eligible employee who has been off work because of COVID-19.
• Employers should maintain records of staff absences and payments of statutory sick pay, but employees will not need to provide a GP fit note.

Eligibility criteria:

• Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020.
• Eligible period for the scheme commenced on 14th March 2020 (the day after the regulations on the extension of Statutory Sick Pay to those staying at home came into force).

How to apply:

A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed. Further information on the scheme can be found here. Further information on new statutory sick pay eligibility criteria can be found here.

A 12-month business rates holiday for all retail, hospitality and leisure businesses in England

Details:

• There will be a 12 month rate-free period for all eligible businesses in the retail, leisure and hospitality sectors. There is no rateable value limit, however the relief will be applied to occupied properties only and will be effective from 1^st April 2020.
• Businesses that received the retail discount in the 2019 to 2020 tax year will be re-billed by their local authority as soon as possible. This expanded retail discount is always calculated after mandatory relief and other discretionary reliefs funded by section 31 grants by local authorities.

Eligibility criteria:

Retail, leisure and hospitality buildings have been defined in the three following categories:

1. Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
2. Buildings used for assembly and leisure; or
3. Buildings used as hotels, guest & boarding premises and self-catering accommodation.

How to apply:

• There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge.
• Further details on who qualifies for this relief and how the relief is calculated can be found here.

Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief

Details:

• The Government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR).
• This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief to help meet their ongoing business costs.

Eligibility criteria/How to apply:

• If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.
• Funding for the scheme will be provided to local authorities by Government in early April. Guidance for local authorities on the scheme will be provided shortly.

Further details can be found here.

Support for nursery businesses that pay business rates

Details:

HM Government have introduced a business rates holiday for nurseries in England for the 2020 to 2021 tax year.

Eligibility criteria:

Your business is based in England and your property occupied by providers on Ofsted’s Early Years Register and wholly or mainly used for the provision of the Early Years Foundation Stage.

How to apply:

There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge.

Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000

Details:

• 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.
• Any enquiries on eligibility for, or provision of, the reliefs should be directed to their local authority.

Eligibility criteria:

Retail, leisure and hospitality buildings have been defined in the three following categories:

1. Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
2. Buildings used for assembly and leisure; or
3. Buildings used as hotels, guest & boarding premises and self-catering accommodation.

How to apply:

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to your relevant local authority. Further details can be found here.

The Coronavirus Business Interruption Loan Scheme (CBILS) offering loans of up to £5 million for SMEs through the British Business Bank

Details:

• A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support primarily small and medium sized businesses to access bank lending and overdrafts.
• The Government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance and potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
• The Government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Please note that the borrower always remains 100% liable for the debt.
• Businesses can access the first 6 months of that finance interest free, as Government will cover the first 6 months of interest payments.
• As well as loans, there are many other types of finance supported by the programme, depending on the provider. You can find out what type of finance they provide through the link below.

Eligibility criteria:

1. A UK based company, with turnover of no more than £41 million per annum.
2. Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see below).
3. Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years.
4. Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements.

How to apply:

• The scheme is now open for applications. All major banks are offering this scheme.
• HM Government suggests you talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them and this will help your finance provider to act quickly once the Scheme has launched.
• If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.

Bank of England lending facility to help support liquidity among larger firms

Details:

• To support larger firms, the Bank of England has announced a new lending facility to provide a quick and cost effective way to raise working capital via the purchase of short-term debt.
• The facility will offer financing on terms comparable to those prevailing in markets in the period before the Covid-19 economic shock.
• The scheme will operate for at least 12 months and for as long as steps are needed to relieve cash flow pressures on firms that make a material contribution to the UK economy.

Eligibility criteria:

• Loans will be open to firms that can demonstrate they were in sound financial health prior to the shock. The facility will look through temporary impacts on firms’ balance sheets and cash flows and on firms’ credit ratings prior to the Covid-19 shock.
• Businesses do not need to have previously issued commercial paper in order to participate.

How to apply:

The Bank will publish further details of the operation of the CCFF in a Market Notice on Wednesday 18^th March. Further details can be found at the Bank of England’s website.

The HMRC Time To Pay Scheme

Details:

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

Eligibility criteria:

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

How to apply:

If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

(This article was written by Samuel Isaac in our Banking & Finance team and all information provided is correct as of 26/03/2020.)