Below is a summary of upcoming changes that the Chancellor announced at the end of May to existing schemes which many businesses have been using as a lifeline, along with a few points on grants and funding.
Coronavirus Local Authority Discretionary Grants Fund (Top-up Grants)
Small and micro businesses with fixed property costs that were not eligible for the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund may be eligible for the Coronavirus Local Authority Discretionary Grants Fund.
Your business could receive a grant of £25,000, £10,000 or any amount under £10,000.
Your business is potentially eligible if it:
• Is based in England
• Has fewer than 50 employees
• Has fixed building costs such as rent
• Was trading on 11th March 2020
• Has been adversely impacted by the coronavirus
You should contact your local authority for details of their schemes but the government has asked that the following businesses have priority:
• Small businesses in shared offices or other types of flexible workspaces
• Regular market traders
• Bed and breakfasts paying council tax instead of business rates
• Charity properties that receive charitable business rates relief that are not eligible for small business rates relief or rural rate relief.
You cannot apply if you received another type of government grant such as the Small Business Grant or the Retail, Hospitality and Leisure Grant. But those businesses that have just claimed under the Job Retention Scheme or the Self-Employed Income Support Scheme will be eligible.
To apply please visit your local authority website to find out how to apply to their scheme. Please note the West Oxfordshire District Council opened their applications to the scheme on the 1st June 2020 and will close the scheme applications on the 14th June 2020, this is so they award amounts by 26th June 2020. Therefore, we recommend you contacting your local authority as soon as possible.
Self-Employed Income Support Scheme
If you are a self-employed individual or a member of a partnership then you may be eligible for a grant under the Self-Employed Income Support Scheme.
The Chancellor announced on 29th May 2020 an extension to the scheme to support the self-employed via a second and final grant in August 2020.
To be eligible for both grants you would have to have:
• Submitted your Income Tax Self-Assessment Tax Return for the 2018/19 tax year.
• Traded in the 2019/20 tax year.
• Be trading when you apply, or would be except for COVID-19
• Have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income comes from self-employment. This is assessed by at least one of the following conditions being true:
• Having trading profits/partnership trading profit in 2018/19 of less than £50,000 and these profits constitute more than half of your total taxable income.
• Having average trading profits in 2016/17, 2017/18 and 2018/19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period. If you started trading within this period HMRC will only use those years for which you filed a tax return.
The eligibility for both grants is the same but please note that you do not have need to have claimed the first to then claim the second grant so, therefore businesses that have been adversely affected by COVID-19 more recently will also be included.
Individuals have to make the claim themselves and HMRC did contact those that were eligible. If you did not receive notification from HMRC and you believe you may be eligible please contact us.
The first grant allowed you to claim a taxable grant worth 80% of your average trading profits, paid in a single instalment covering a three months period. The maximum grant that could be claimed was £7,500 representing £2,500 per month maximum.
Claims for this grant opened on the 13th May 2020 and if you have not yet claimed the first grant you have until the 13th July 2020 to do so.
This second taxable grant will be worth 70% of your average monthly trading profits and will again be paid out in a single instalment covering a further three months period. The maximum grant that can be claimed is capped at £6,570.
The online service for the second grant is not yet available; news of when it will be available should be provided within the guidance that HMRC said will be issued on the 12th June 2020.
Changes to the Coronavirus Job Retention Scheme
On 29th May 2020 the Chancellor announced three changes to the Coronavirus Job Retention Scheme which are as follows:
1) The scheme will close to new entrants from 30th June 2020; this means that the employer can only claim for employees that have been furloughed for a full three-week period prior to this date.
Therefore, it is important to note this date and then count back 21 days as this means the final date by which an employer can furlough an employee for the first time will be the 10th June 2020.
2) From 1st July 2020 the scheme will be made more flexible to enable employers to bring furloughed employees back part time and still receive a grant for the time when they are not working.
Employers will decide the hours and shift patterns their employees will work on their return. The employer will then be responsible for paying the wages in full while the employee is working with the government continuing to contribute towards the normal hours that the employee does not work.
Any working hours arrangement agreed between the employer and employee must cover at least one week and be confirmed in writing to the employee. This is important as the minimum claim period will be a week but the employer can choose to make claims for longer periods.
Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and the actual hours that they have worked. The cap on the furlough grant will be proportional to the hours not worked.
3) Employers will have to start contributing to the wage costs of paying their furloughed staff as from 1st August 2020. The employer contribution will gradually increase in September and October 2020.
Therefore, please note the following:
• In June and July the grant will remain at 80% of wages up to a cap of £2,500 as well as the employer national insurance and pension contributions on the grant. If the employee commences part time working in July the employer will have to pay for the hours that the employee actually worked.
• In August the grant will again remain at 80% of wages up to a cap of £2,500 but employers will be responsible for paying the employer national insurance and pension contributions.
• The grant will reduce to 70% of wages up to a cap of £2,187.50 as from September for the hours that the employee does not work. The employer will contribute the additional 10% of the wages to make the total up to 80%, up to the cap of £2,500, as well as covering the employer national insurance and pension.
• The grant will reduce to 60% of wages up to a cap of £1,875 as from October for the hours that the employee does not work. The employer will contribute the additional 20% of the wages to make the total up to 80%, up to the cap of £2,500, as well as covering the employer national insurance and pension.
• The scheme will close at the end of October 2020.
Further guidance is expected to be issued 12th June 2020 on how to calculate the claims with the extra flexibility.
Access to Loan Schemes
At this present time, the vast majority of funders are only supporting existing clients. For many businesses, this will be a straightforward and relatively painless process. For others, not so.
Before applying for government funding, we would suggest speaking to one of our Corporate Finance team to ascertain what the best method of funding for your business may be.
Our team are helping clients with applications and assessing the best options available to them, whatever the nature, size and form of business.
We have access to a wide range of providers and all types of funding. Our advice is straightforward; speak to your bank first, then speak to us – but ideally, speak to us first – the first conversation is free!
Check the terms and conditions, there are a number of requirements that you will have to certify as part of the process.
Bounce Back Loan Scheme (BBLS)
Funding to get you back trading again. How many business are using it to get through the current period?
For most businesses, it’s easy to access and a quick way to receive up to £50,000. No personal guarantee and the government provides 100% guarantee – albeit the business remains liable. This is especially important is you are a sole trader or partnership.
There have been some teething problems as systems have been implemented but the majority of the established retail banks are all now established with their BBLS offering.
A number of other providers may require you to be up and running as an existing client before you can access BBLS.
Coronavirus Business Interruption Loan Scheme (CBILS)
Still being offered to existing clients only and a number of the newly accredited providers are geographically selective (and were providers of targeted EFG support).
We work with most of the providers (where there are not geographical restrictions) and are monitoring which are open to ‘new’ clients as things unfold.
Just remember – these are funders lending their money but with a part Government guarantee that may not cover all of the loan; that is why CBILS still has strict underwriting criteria. If your business has a ‘story’ that needs to be explained, we may be able to help.
There remains a full range of ‘normal’ lending products in the marketplace. Government support has its place but is it sufficient for your cashflow requirements.
Even during the Coronavirus outbreak, we have continued to help clients access government funding as well as property and general working capital facilities.
Our clients are still progressing with plans for business resilience, growth and succession planning – businesses are still being acquired and transferring to new ownership.
Our team of advisors remain available to provide support across all areas of finance:
o Property Development and Property Investment
o Working capital and Trade Finance
o Treasury Management
o Business growth
o Business Transfer – Purchase, Sale or Partial/Managed Exit
o Financial risk mitigation
If you wish to discuss your business funding requirements; whether you are looking to borrow now or assess your options. Please feel free to contact Mark Crossfield on 07780 957631 or firstname.lastname@example.org
We also take this time to highlight again that there are people out there trying to take advantage of the situation by setting up scams, especially those claiming to be HMRC.
If someone texts, calls or emails claiming to be from HMRC, saying you can claim financial help or are owed a tax refund, and ask you to click on a link or to give information such as your name, credit card or bank details, it is a scam.
Please feel free to contact us if you have any questions in regards to the above or any questions you have in relation to your business specifically.
Please keep an eye on our website for further updates as well as signing up to our Resources section.