COVID-19 Government Business Support

26 March 2020

Many clients and contacts have commented that they are feeling overwhelmed by all the Government announcements of support for business and what to do next and how to implement it. So Prospero are summarising the main offerings and position as it stands today.

All of this Government support is great but the issue for business owners is understanding the cash flow impact on their business.  To understand that you will need to make some pretty important assumptions:-

So what you need to do is prepare integrated profit and loss, cash flow and balance sheet financial forecasts for at least the year ahead.  You need to prepare it on your best estimate based on the answers to your assumptions and then flex it for the worst case scenario.

That will then identify any funding gaps you have and whether you need to take advantage of the Cornoavirus Business Interruption Loan Scheme (CBILS) which in now LIVE – see point 1 in the table below. It is most certain that the lenders under CBILS will want to see such forecasts as part of a lending proposition.

More details regarding cash flow management and forecasting can be found here

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Coronavirus Business Interruption Loan Scheme

https://www.gov.uk/government/ publications/guidance-toemployers-and-businessesabout-covid-19/covid-19- support-forbusinesses#support-forbusinesses-through-thecoronavirus-businessinterruption-loan-scheme

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.

See the British Business Bank for more details https://www.british-businessbank.co.uk/ourpartners/coronavirus-businessinterruption-loan-scheme-cbils/for-businesses-andadvisors/ To be eligible turnover has to be less than £45 million. The Government is only offering 80% guarantee for security. However, your business remains 100% liable for the borrowing. At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. Loans up to £250,000 do not require a personal guarantee. Loans above £250,000 may require a personal guarantee but this excludes personal homes of directors and in any case, is limited to 20% of any shortfall to bank lending after applying all of the company assets.

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Support for Business Through Deferring VAT

The deferral will apply from 20 March 2020 to 30 June 2020. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.

All UK businesses are eligible Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return. At the moment the VAT has to be paid by the end of the 2020/21 tax year i.e. 31 March 2021, so note for your cash flow this is a deferral only

Support for Businesses paying tax

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

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559. If you’re worried about a future payment, please call them nearer the time.

Protection from eviction for Commercial tenants

Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction. These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. There is the option for the Government to extend this period if needed. This is not a rental holiday. All commercial tenants will still be liable for the rent. Commercial tenants are protected from eviction if they are unable to pay rent.

All commercial tenants in England, Wales and Northern Ireland are eligible. The change came into force with the passing of the Coronavirus Act 2020 on 25th March 2020. No action is required. However, it makes sense to open up dialogue with your landlord now. If you have rent due on 1 April 2020 you should strongly consider cancelling any direct debit or standing order you have in place if this is going to place severe strain on your cash flow. Again this is a cash flow deferral only and at some point you will have to agree with your landlord how and when this is paid.

Business rates holiday for retail, hospitality and leisure businesses

A business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year is being introduced

To be eligible

– your business must be based in England and

– your business is in the retail, hospitality and/or leisure sector

There is no action for you to take. This will apply to your next council tax bill in April 2020. However, if you have a direct debit or standing order in place, I would cancel this now to prevent your local authority accidentally taking this.

Cash grants for retail, hospitality and leisure businesses

Provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000. Businesses in these sectors with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.

You are eligible for the grant if:

– your business is based in England

– your business is in the retail, hospitality and/or leisure sector

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Support for businesses that pay little or no business rate

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

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Coronavirus Job Retention Scheme

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-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. HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month.

Guidance from HMRC on What You’ll Need, How to Claim including a link to their portal to make a claim and What Happens After you’ve Claimed are detailed on https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

Support for Businesses who are paying sick pay to employees due to COVID-19

https://www.gov.uk/government/

publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-coronavirus-covid-19#sick-pay

Legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19 was passed in the Coronavirus Act 2020 on the 25th March 2020. It provides for a refund of up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19. SSP for COVID-19 is payable from day 1 rather day 4 for other illnesses.

Eligible for employers with fewer than 250 employees – the size of an employer will be determined by the number of people they employed as of 28 February 2020. Currently SSP is not reclaimable for other illnesses. HMRC are, therefore, working on a repayment mechanism for employers as soon as possible Employers are required to maintain records of staff absences and payments of SSP but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website