With coronavirus forcing many businesses to close their doors, suspend trading, diversify or change the way they work, some now for a second time, we’ve had a look at the support packages being made available to help start-ups and established businesses through this difficult period.
The Chancellor, Rishi Sunak, first announced a range of schemes to support businesses during the first lockdown in his maiden Budget, with many of these schemes now being rolled out and expanded upon as the business world deals with the effects of the pandemic. An outline of the measures that have been taken are below:
Coronavirus Business Interruption Loan Scheme (CBILS)
Run by The British Business Bank, CBILS allows smaller businesses to apply for a loan facility of up to £5m if they are experiencing lost or deferred revenues. The scheme went live on Monday 23 March and will initially run for six months. The loans are interest-free for up to 12 months and any loans will need to be repaid within six years, while overdraft and invoice facilities can last for up to three years. To be eligible, businesses must have an annual turnover of no more than £45m and have to prove that the pandemic has had an impact on trading. In the first instances, businesses should approach the provider they already bank with. For more information, visit The British Business Bank website.
Covid Corporate Financing Facility (CCFF)
Businesses with an annual turnover of more than £45m could be supported by the Bank of England’s new CCFF scheme. The CCFF enables larger firms to apply for funding of at least £1m. Businesses must be able to show they were in ‘sound financial health’ before the pandemic hit, ideally through a good credit rating. Again, firms must approach their own finance provider in the first instance. For more information, visit the Bank of England website.
Coronavirus Job Retention Scheme
All employers will be able to access support to continue paying workers 80% of their salaries up to £2,500 a month if they had otherwise been made redundant. Employers will need to tell their employees about this temporary arrangement and then submit information to HMRC through a new online portal. The scheme went live in April, accessible through the government's online portal. This was extended in June to allow for employers to use the scheme flexibly and bring back employees part-time.
Jobs Retention Bonus
More than nine million workers have been on furlough in the past few months under the Job Retention Scheme. As lockdown eases, the government is to provide a £1,000 bonus for each employee they bring back from furlough, as long as they are paid at least £520 per month on average between November 2020 and January 2021.
The bonus, which is not meant to cover wages, will be paid as a grant to employers. Payments will be made in February 2021, and more detail about how to claim will come in July 2020.
The government is to launch a new Kickstart Scheme to help increase job creation for young individuals entering the workforce.
The scheme will pay employers directly, covering new workers' wages for six months, plus an amount to cover overheads. New workers must be aged 16-24, at risk of long-term unemployment and will be paid at least the National Minimum Wage. Employers must also prove any job is new, over and above any existing jobs they have.
Employers can apply to be part of the scheme from next month, with the first Kickstarters in their new jobs this autumn.
Apprenticeships and Traineeships Bonuses
From August to January, any firm that hires a new young apprentice aged 16 to 24 will receive £2,000, while those that hire new apprentices aged 25 and over will be paid £1,500. Employers will also be paid £1,000 to take on new trainees.
Hospitality, Tourism and Leisure support
Supporting the sectors hit hardest by the pandemic, the government has announced a series of measures. VAT has been cut from 20% to 5% on food, accommodation and attractions until 12 January 2021.
And for the whole month of August, participating businesses will be able to offer 50% off meals, up to a maximum discount of £10 per head for everyone, including children, Monday to Wednesday.
Businesses will need to register through a new website being created, and will be able to claim the discounts back each week in August, with the funds paid into their bank account within five days.
UK businesses driving innovation and development will be helped through the coronavirus outbreak with a £1.25 billion government support package. The package includes a new £500 million loan scheme for high-growth firms, called the Future Fund, and £750 million of targeted support for small and medium-sized businesses focusing on research and development. More details on eligibility will be announced soon.
Bounce Back Loans
In April, the government announced a new Bounce Back Loans scheme, enabling small businesses to borrow between £2,000 and £50,000. Loans will be interest free for the first 12 months and can be accessed quickly through a network of lenders. Businesses wanting to apply for support will be able to do so by filling in a short online form, which went live in early May.
Business rate holiday
Retail, hospitality and leisure businesses will not pay business rates for the 2020/21 financial year. This is applied automatically.
The Retail and Hospitality Grant Scheme
Businesses in the retail, hospitality and leisure sectors may be eligible for a cash grant of up to £25,000 per property, depending on the rateable value of their property. Local authorities will write to businesses which are eligible.
Small Business Grant Scheme
Grants of £10,000 are available to any business occupying a property that is already receiving Small Business Rate Relief or Rural Rate Relief. Local authorities will write to businesses which are eligible.
VAT has been deferred for three months from 20 March to 30 June 2020. All UK businesses will be given until the end of the 2020/21 tax year to pay any liabilities. VAT refunds and reclaims will be paid as normal by the government, though.
Statutory Sick Pay
A rebate scheme is being developed to allow small and medium-sized businesses to reclaim Statutory Sick Pay paid for sickness absences caused by coronavirus for up to two weeks per employee. Employees do not need to provide a sick note from a doctor, but an ‘isolation note’ can be obtained by NHS 111 online if necessary. This scheme is now live on the government's dedicated website.
Support for self-employed people
With more than five million UK workers classed as self-employed, the government has announced a series of measures designed to offer support.
Self-employed people with three years' worth of submitted accounts are able to claim a taxable grant worth 80% of their profit, up to a total of £7,500. They are also able to claim for a second wave of this funding at 70% of their profit, up to £6,570. The scheme is open to people who have annual profits of up to £50,000 a year and who make the majority of their income from self-employment. HMRC is contacting people who are eligible during each wave and this can be submitted through the Government Gateway portal. The grants will need to be declared on tax returns when submitted in January 2022.
Earlier measures announced include the self-employed being able to access Universal Credit at a rate equivalent to Statutory Sick Pay – around £94 a week – and the new Employment and Support Allowance is available for people affected by the virus, even if you find yourself simply self-isolating. You won’t need to go to a job centre. For more information on claiming benefits during the coronavirus outbreak, visit the government’s dedicated website.
For anyone who owes tax already, the Government has introduced new ‘time to pay’ arrangements to defer payments if necessary.
Self-assessment payments have also been deferred until January 2021, so sole traders won’t need to pay the tax normally due in July 2020.
The new IR35 regulations, which were due to come into force in April 2020, have also now been postponed for at least a year.
The government has also launched a new helpline to support businesses and self-employed people during this time. Some 2,000 call handlers are now taking calls on 0800 0159 559 Monday-Saturday.
As of October 2020, the Chancellor has announced an extension to the Self-Employment Income Support Scheme for a further six months, offering two more grants, and self-assessment taxpayers can now delay tax payments from 31 January 2021 to January 2022. This is part of the Winter Economy Plan which can be viewed here.
'Pay As You Grow' Loan Payback Scheme
This new scheme announced at the end of September 2020 includes an extension to the repayment of Bounce Back Loans from six to 10 years, slashing the average monthly repayment and offering interest-only payments or suspensions to payments if businesses are struggling. You can read more on the scheme here.
Coronavirus Restrictions Fund (Scotland)
With new restrictions affecting many businesses across Scotland as of October 2020, the Scottish government has outlined a £40 million support fund. You can read more here.
Winter Economy Plan
The Chancellor has outlined all measures to support businesses, employers and employees throughout the winter period in the newly announced Winter Economy Plan.
Start Up Loans
A Start Up Loan is a personal loan for founders looking to start or grow their business. Founders can borrow anything from £500 to £25,000 per co-founder, for a fixed interest rate of 6% and for up to five years. This is available to anyone who has an idea and is looking to start up, right through to businesses that have been trading for up to two years.
As part of the loan application you will be matched with one of our dedicated Business Advisors who will support you through the first stages of the loan application. Capital repayment holidays are available in the first year - be sure to speak to your Business Advisor if you are interested in exploring this option.
In addition to this pre-loan support, every founder we fund receives twelve months of exclusive support as part of The Funded Club. This includes access to expert guidance to help you start and scale your business, a dedicated business advice helpline, regular opportunities to meet with specialist mentors and network with other founders, as well as the option to be matched 1-on-1 with an experienced mentor.
With the UK in the midst of a second national lockdown, further support measures have been announced in extension of the previous measures that have been put in place. A summary of new developments can be found below:
The Furlough Scheme
The furlough scheme will now be extended until March 2021, with a review in January. The scheme will offer the same as before, covering 80% of employees' wages up to £2,500.
An update to the Bounce Back Loans scheme
An update to the government's Bounce Back Loans scheme has been announced. The deadline for applications has been extended until 31st January 2021, with the ability to top up an existing Bounce Back Loan if the full amount was not taken the first time around. This will not show up in your personal credit report. More can be read on the updates here.
Virgin StartUp is supporting its community during this period of uncertainty. Read the update from our Managing Director for more information.