Nygel Stevenson of Madhatters tearoom in Kimberley contacted me to find out more information on how he can gain access to the small business grant that was recently announced. With this question from Nygel in mind, I asked the Chancellor (Rishi Sunak), in the House of Commons during yesterday’s (17th of March) Economic Update, about how small business can access the funds.
LAST UPDATED: 19TH MARCH AT 14:40PM
The Government recognises the huge challenges faced by many businesses in light of the Coronavirus epidemic, and is supporting businesses.
In both the Budget, and the statement made by the Chancellor on 17th March 2020, a set of measures were announced to help businesses at this difficult time.
As Rishi Sunak has said 'we will do whatever it takes'.
Government guaranteed loans
- The government is making available an initial £330 billion of loans and guarantees - equivalent to 15% of our GDP. That means that businesses who need access to cash top pay their rent, salaries, suppliers or purchase stock will be able to access a government-backed loan, on attractive terms.
- If demand is greater than the initial £330bn, the Chancellor will go further and provide as much capacity as required. That means any good business in financial difficulty who needs access to cash to pay their rent, the salaries of their employees, pay suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms.
- These loans will be available through two main schemes, which will be up and running by the start of next week:
- For larger firms, to support liquidity, a new lending facility will be created to provide low cost, easily accessible commercial paper.
- To support lending to Small and Medium Sized businesses, the new Business Interruption Loan Scheme will be extended, providing loans of up to £5 million, with no interest due for the first six months.
In the coming days, a potential support package for airlines and airports will be discussed.
The Chancellor is also taking a new legal power in the COVID-19 Bill to offer whatever further financial support is necessary.
Insurance, business rate relief and cash grants
- For pubs, clubs, theatres and other hospitality, leisure and retail venues which have a policy that covers pandemics, the government's action is sufficient and will allow businesses to make an insurance claim against their policy.
- For businesses which don't have insurance, those with a rateable value of less than £51,000 will receive an additional cash grant of up to £25,000 per business to bridge through this period.
- All businesses in these sectors, regardless of their rateable value will pay no business rates this year. In the budget, we said that any business in this sector with a rateable value of less than £51,000 can have a 100 per cent discount on their business rates. This is now going further – so all businesses in this sector, irrespective of their rateable value, are exempt from business rates for 12 months – that’s every single shop, pub, theatre, music venue, restaurant, and any other business in the retail, hospitality or leisure sectors.
- The government will provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no Business Rates, because of Small Business Rate Relief. This will provide a one-off grant of £10,000 to around 700,000 businesses who currently receive Small Business Rate Relief or Rural Rate Relief, to help meet their business costs. Local authorities will be fully compensated for these measures.
Statutory Sick Pay
- The government will legislate to allow small and medium-sized businesses (SME's) to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to Coronavirus for up to two weeks.
Support with tax liabilities
- All businesses and the self-employed in financial distress with outstanding tax liabilities may be eligible to receive support with their tax affairs through the HMRC's Time To Pay service. We all have to play our part in tackling this virus and slowing the spread. As with any new illness, information about the virus spreads is still emerging, but symptoms of Coronavirus include a cough, high temperature and shortness of breath.
If you are a small- or medium-sized business, you may be entitled to reclaim the costs of Statutory Sick Pay (SSP) for sickness absence due to COVID-19:
- This refund will cover up to two weeks’ SSP per eligible employee who are either ill or been told to self-isolate because of COVID-19. This is in line with the recommended isolation period. Guidance on self-isolation can be found here: www.nhs.uk/conditions/coronavirus-covid-19.
- 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.
- 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, but employees will not need to provide a GP fit note.
- The eligible period for the scheme began on 13 March.
- The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. Existing systems are not designed to facilitate employer refunds for SSP.
Some businesses, including nurseries, in England will be eligible for a Business Rates holiday for 1 year from 1 April 2020:
- If you are currently receiving the retail discount for your Business Rates bill, you will receive a revised bill with 100% relief shortly.
- If your business occupies a property in the retail sector with a rateable value of £51,000 or more, or if your business occupies a property in the leisure or hospitality sectors you may also be eligible for the 100% discount on your business rates bill.
- You will shortly hear from your Local Authority. If you have any questions, you should contact your Local Authority.
- If you are a nursery, you will be entitled to the 100% relief for the next year. You should contact your Local Authority for more information.
- Guidance for Local Authorities will be published by MHCLG by 20 March.
If your business is eligible for small business rate relief or rural rate relief in England, you are entitled to a one-off cash grant of £10,000:
- If your business is in the retail, hospitality or leisure sector in England, then you may also be entitled to a cash grant. If you have a property with a rateable value of less than £15,000 then you will be entitled to a grant of £10,000, whether or not you are entitled to small business rate relief or rural rate relief. If you have a property with a rateable value of between £14,999 and £51,000 then you will be entitled to a cash grant of £25,000.
- The Department for Business, Energy and Industrial Strategy (BEIS) will provide guidance for Local Authorities on how to administer these grants shortly.
- If you are an eligible business, your Local Authority will then be in touch in the coming weeks to provide details of how to claim this money.
If your small-or medium-sized business in England is facing cash flow issues as a result of COIVD-19, please read the following information:
- A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch at the start of next week to support businesses to access bank lending and overdrafts.
- The government will provide lenders with a partial guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs.
- The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. The first 6 months of these loans will be interest-free, as the Government will cover these payments.
- Businesses will be able to get finance under the scheme from a large number of providers, including the main high street banks, as of next week.
- Businesses will remain responsible for repaying any facility they take out.
- For further information, please visit: https://www.british-business-bank.co.uk/ourpartners/coronavirus-busines….
If you are a large business facing cash flow issues as a result of COIVD-19, you may want to read the following information:
- Companies commonly sell short term debt (‘commercial paper’) to the market. This is a quick and cost effective to raise working capital.
- The new COVID-19 Corporate Financing Facility means that the Bank of England will buy short term debt from companies.
- This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze, enabling them to continue financing their short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.
- Further details can be found here in the exchange of letters between the Governor of the Bank of England and the Chancellor, found here: https://www.gov.uk/government/publications/launch-of-covid-19-corporate….
If you are self-employed or own a business and you are concerned about not being able to pay your tax bills because of COVID-19, you may be eligible for support through Her Majesty’s Revenue and Customs’ (HMRC) Time to Pay service:
- If you think you or your business is eligible for support through Time to Pay, you can call the following helpline number to get practical help and advice: 0800 0159 559.
- These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
- For more information, please check the HMRC site here: https://www.gov.uk/government/news/tax-helpline-to-support-businesses-a….
If you own a pub that serves food or a restaurant in England, you will be able to operate a hot food takeaway to serve people staying at home, without going through the usual planning process:
- The Ministry for Housing, Communities and Local Government (MHCLG) will shortly legislate to bring forward a temporary Permitted Development Right to allow for change of use from A3 (Restaurant) and A4 (Pub) to A5 (Hot Food Takeaway).
- The intention is that once the legislation has come into force a pub or restaurant will be able to notify their Local Authority that they are now operating as a takeaway without any prior approval.
If you contract your services to large- or medium-sized organisations outside of the public sector you should read the following information:
- The government announced on 17 March that the reform to the off-payroll working rules (commonly known as IR35) – that would have applied for people contracting their services to large or medium-sized organisations outside the public sector – will be delayed for one year from 6 April 2020 until 6 April 2021.
- Business and individuals do not need to take any action.
If the only barrier to your business making an insurance claim was a lack of clarity on whether the government advising people to stay away from businesses, rather than ordering businesses to shut down, was sufficient to make a claim on business interruption insurance:
- The government’s medical advice of 16 March is sufficient to enable those businesses which have an insurance policy that covers both pandemics and government ordered closure to make a claim – provided all other terms and conditions in their policy are met. Businesses should check the terms and conditions of their specific policy and contact their providers if in doubt.
- However, most businesses have not purchased insurance that covers pandemic related losses. As such, any affected businesses should note the government’s full package of support, including the Coronavirus Business Interruption Loan Scheme and business rates holiday.