Given this period of disruption caused by COVID-19, UK Chancellor Rishi Sunak has set out a package of temporary, timely and targeted measures to support public services, people and businesses. Our aim is to summarise the raft of measures that have been announced by the government regarding financial support and make this available to you.
Small business support - Coronavirus Business Interruption Loan Scheme (CBILS):
A new scheme, announced by the Chancellor at Budget 2020, that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
The temporary CBILS will support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years. The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. There are 40 accredited lenders able to offer the scheme, including all the major banks.
Employers and employees support:
Coronavirus Job Retention Scheme
All 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. All UK businesses are eligible. They need to simply designate affected employees as ‘furloughed workers,’ and notify the employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. Once the information is submitted to HMRC about the employees that have been furloughed and their earnings through a new online portal 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.
Statutory Sick Pay “SSP” for Small or medium sized businesses
HM Treasury has announced that small and medium sized employers (those with fewer than 250 employees) may recover the cost where SSP has been paid as a result of COVID-19 from 13 March for a maximum of two weeks’ sickness per employee.
Rollout of the IR35 reform has been delayed to April 2021 as part of wider measures to safeguard the UK economy against the pandemic and giving the private sector extra time to prepare. This delay certainly brings a sigh of relief from the contracting industry and will also reduce pressure on the self-employed who are concerned about what the outbreak will mean for their projects.
This is accompanied by the deferral of VAT Payments where all UK VAT registered businesses can defer VAT payments due between 20 March 2020 and 30 June 2020 until the end of the tax year.
Grants and R&D:
The government has announced the Retail and Hospitality Grant Scheme which provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. And for businesses in these sectors with a rateable value of between £15,000 and £51,000, they will receive a grant of £25,000.
Next, this is not a direct response to COVID-19 but yet worth noting - Rishi Sunak plans to dramatically increase public R&D investment to £22 billion per year by 2024-25. This increase would be the largest and fastest ever expansion of support for basic research and innovation, taking direct support for R&D to 0.8% of GDP and placing the UK among the top quarter of OECD nations and creating an innovation-intensive and technology-driven economy.
The increase in R&D investment is set to support a range of objectives such as backing businesses to innovate and grow (~£1.1B), supporting world-leading research in all regions and nations (~£1.58B), overcoming societal challenges (~£1.59B) and growing a greener economy (~£1.9B).
Further details on the announcements of funding for medium and large businesses expected early next week. So stay tuned at https://www.businessfundingshow.com/blogposts for more detailed articles and summaries or follow us on twitter @bizfundingshow for live updates as it all unfolds.
We are also going to soon release a series of expert webinars with industry leaders where you can learn and ask questions about the recent developments in real-time, more details to follow soon.