9 Ways Small Businesses Can Access Financial Support During the COVID-19 Crisis

For many small businesses, including restaurants and hair salons, re-opening on 4 July 2020 will be a welcome relief. However, not every business has the green light to open yet – and even those who do still face a long financial recovery. Here’s how the UK government is supporting businesses financially as they return and recover.

---

As of 21 June 2020, the UK government has paid out over £10.48 billion to 853,800 small and medium enterprises (SMEs), helping them through the COVID-19 pandemic. The support is part of Chancellor Rishi Sunak’s £350 billion pledge to UK businesses and their employees, offering grants and business rates holidays, among other measures.

Although applications for these schemes have slowed in recent weeks, support and additional loans are still available. Eligibility criteria is also shifting, causing city councils – and Scotland’s finance secretary Kate Forbes – to keep encouraging SMEs to know their options:

“Our programme is kept under constant review, and we are always looking for ways to extend eligibility to help more businesses.”

Here’s the support currently available.

New financial support during the COVID-19 crisis

NEW: Discretionary Grants Fund for small and micro-businesses

What is it: If your business hasn’t been eligible for any of the grant schemes until now, you could apply for the Discretionary Grants Fund. It offers small and micro-businesses £25,000 or £10,000 and below, as determined by their local council.

Who is eligible: England-based small businesses that occupy property with relatively high fixed costs can apply. Councils have been asked to prioritise small businesses in shared offices, regular market traders, B&Bs paying council tax, and charity properties receiving business rates relief.

What to know: Applications for this funding are due to close soon. While they differ by council, the majority have a cut-off date of the first week of July 2020.

NEW: A flexible job retention scheme to bring furloughed staff back

Important: The original job retention scheme is evolving on 1 July 2020. This section only applies if you have furloughed staff already and have used the previous scheme for at least three weeks.

What is it: The adapted scheme will allow you to bring back furloughed staff part-time, while still claiming the grant for the hours not worked. Employees will continue to receive 80% of their salary, up to £2,500 per month.

Who is eligible: The scheme is closed to new applicants. Only businesses already enrolled in the scheme for at least three weeks qualify.

What to know: This is a short-term scheme and will end on 31 October 2020. Claims can only be made from 1 July 2020 onwards, and staff can remain fully furloughed if your business still cannot open.

Existing financial support during the COVID-19 crisis

A year-long business rates holiday for retail, hospitality and leisure businesses

What is it: England-based companies in these sectors can expect a 12-month break on paying business rates for the 2020/2021 tax year.

Who is eligible: This proposal should benefit “occupied hereditaments” used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues. It would also cover hotels and self-catering accommodation.

What to know: You don’t have to take any action to benefit from this tax holiday; the changes should automatically have been made to your council tax bill in April 2020.

A £10,000 grant fund for businesses with small business rate relief or rural rate relief

What is it: In place of a business rates holiday, organisations already eligible for small business rate relief or rural rate relief will be given a £10,000 grant to help with their finances.

Who is eligible: If this applies to you, your local authority would already have contacted you, to start receiving funding in early April.

What to know: You do not have to pay the grant back, but it will be taxable. However, tax only applies to businesses that make an overall profit after grant income is included. If you’re eligible for the grant but have not received it yet, contact your local council.

A £25,000 grant for certain retail, hospitality and leisure businesses

What is it: A one-off cash grant of up to £25,000 from local councils for businesses in England in the retail, hospitality and leisure sectors.

Who is eligible: If your business has a property with a rateable value of between £15,000 and £51,000, you’re eligible for a £25,000 government grant. If your rateable value is less than £15,000, you could apply for a grant of £10,000. Get in touch with your local authority to find out more.

What to know:

• Same as the small business grant fund, you do not have to pay the grant back.
• Tax will apply to businesses that make an overall profit after grant income is included.
• Enquire with your local council if you’re eligible but have not yet received the grant.

Loans of up to £5 million for SMEs through the Coronavirus Business Interruption Loan Scheme (CBILS)

What is it: A scheme that allows SMEs to access loans up to £5 million. The government provides lenders with an 80% guarantee on each loan, requiring no interest payments or fees for 12 months. This pledge comes from the British Business Bank with the aim of encouraging lenders to continue working with small and medium-sized businesses.

Who is eligible: You’re eligible for this scheme if your business is based in the UK, generates an annual revenue of less than £45 million and meets the other British Business Bank criteria. 40 approved lenders will be involved in the programme from 23 March 2020, including all major banks.

What to know: To get the process started, contact your bank or lender to discuss your finance. If you’ve already taken out a loan, you can discuss a repayment holiday instead.

Bounce Back Loans to help SMEs access finance more quickly

What is it: A scheme to help SMEs borrow between £2,000 and up to 25% of their turnover, to a maximum of £50,000. The government will guarantee 100% of the loan and there won’t be any fees or interest in the first 12 months.

Who is eligible: UK businesses established before March 2020 that have been adversely impacted by coronavirus.

What to know:

• Applications for the scheme are only available until 4 November 2020, through a select list of 11 vendors (including main retail banks).
• You can approach them directly through their website.
• The length of the loan is six years, and you can pay it off early without any fees.
• You cannot apply for the loan if you’re already receiving support through CBILS (above).

Support in managing cash flow through VAT deferrals

What is it: If you have a VAT payment due between 20 March 2020 and 30 June 2020, you can defer the payment until a later date. HMRC won’t charge interest or penalties on any amount deferred.

Who is eligible: UK VAT registered businesses.

What to know:

• You don’t need to tell HMRC that you’re deferring your VAT payment. However, you will need to pay the VAT due on or before 31 March 2021.
• If you owe less than £10,000 you may be eligible for the Time to Pay scheme. This allows you to pay your self-assessment tax bill in installments.
• If you’ve been unable to pay a recent tax bill or think you might miss your next one as a result of coronavirus, call HMRC’s helpline on 0800 0159 559.

Statutory sick pay for SMEs

What is it: This scheme allows you to reclaim up to two weeks of statutory sick pay (SSP) per employee.

Who is eligible: All UK businesses with under 250 workers.

What to know:

• You can claim SSP back if your employee is / has been off work a) self-isolating due to coronavirus symptoms (on or before 13 March 2020), b) self-isolating due to living with someone with coronavirus symptoms, or c) shielding (on or before 16 April 2020).
• As of 28 May 2020, you can also claim SSP if your employee has been notified by the NHS or Public Health that they’ve come into contact with someone with coronavirus, and are now off work to self-isolate.
• You don’t need to provide GP sick notes for staff members, but you should keep records of any days individual employees have been off work (and keep these records for up to three years).
• If staff absence has already affected your business, their SSP can be backdated and reclaimed. However, employees have to have been sick on or before the relevant dates above.

Other support bundles

A new Bank of England lending facility

This new service will help larger businesses ease their cash flow by buying their short-term debt. All UK-based businesses qualify for the scheme, which started on 23 March 2020.

Interest rate reduction

The Bank of England, which guides the UK’s official lenders, has decreased its interest rates to 0.1%, after reducing them to 0.25% earlier in the same week. This means interest rates are now at their lowest point in the bank’s 325 years of operation.

The bank warned:

“The spread of COVID-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large, but should be temporary.”

Business insurance

Alongside these support packs, the government has also urged businesses to check their insurance policies. Most bundles don’t cover pandemics, so it’s worth finding out how you’re protected. If you do have insurance for pandemics and government-ordered closures, you should now be able to make a claim. To get the process started, contact your insurance provider.

A final note

The situation continues to change daily, so it’s worth checking in with your local councils and lenders. We’ll also keep this article updated so you can find out the latest news for businesses in the UK.

To find out more about how to overcome an economic crisis, view our other coronavirus articles:

12 Tips to Help Your Business Survive the COVID-19 Crisis 5 COVID-19 Trends Likely To Stay and Change the Way We Do Business