As a result of the COVID-19 pandemic, a lot of small businesses globally have found themselves in dire straits financially as they haven’t been able to receive customers due to the lock-downs. Clients of other businesses have lost jobs or been hit badly resulting in reduced financial capability. The last global pandemic was 100 years ago.
This means nothing, no experience could prepare small businesses for the current situation we are in.
Most of our clients are small businesses and while we have implemented measures such as discounted or suspended retainerships, pro-bono consulting, extended payment plans and the like among our clients, we have gathered a couple of resources that would be helpful to businesses in the United Kingdom (our primary location):
- Bounce Back Loans: The Bounce Back Loan (BBL) scheme was introduced by the U.K. government a few months ago to provide Businesses affected by the coronavirus pandemic with 100% guaranteed quick loans for small amounts at a low interest rate. The scheme allows small and medium sized businesses take out loans from £2,000 up to 25% of their annual turnover (to a maximum of £50,000). Bounce back loans are fee and interest free for the first 12 months after which an annual interest rate of 2.5% applies. Bounce back loans are for businesses based in the UK which were established before the 1st of March 2020 and were adversely affected by the pandemic. Bounce back loans are repayable over 6 years (with no fees charged on early repayments). You can apply for this loan through your bank/financial institution and you can check if your bank is offering them by clicking here.
- Coronavirus Business Interruption Loan Scheme (CBILS): This is a program for larger UK based businesses with turnover of up to £45m and allows them take loans of up to £5m in the form of term loans, overdrafts, invoice finance or asset finance. 80% of the CBILS loan sum is guaranteed by the UK government which also pays all interests and fees due for the first 12 months. The loans are repayable over 6 years, for loans and asset finance facilities and 3 years for overdrafts and invoice finance facilities. This type of financing requires more documentation than the Bounce Back loans and so you might have to present financial documents to prove capability to repay such as a business plan, asset register, financial accounts and cash flow forecasts. The funds can be gotten from most major UK financial institutions (101 as at today) and you can check if your financial institution offers them by checking this link. There is also a version of the scheme for much larger firms.
- The Future fund: For innovative UK companies incorporated on or before 31 December 2019 which are yet to make revenue/profits and hence depend on investments to run, the future fund is the best option. This is meant for UK incorporated companies which have raised at least £250,000 in the last 5 years, have at least half of their employees based in the UK/half of their revenue from UK sales and have no shares traded on a regulated market. Convertible loans of between £125,000 and £5m at an annual interest rate of 8% can be obtained and the application is to be initiated by the investor/lead investor in the business.
- Coronavirus Job Retention Scheme: This was announced by the UK government on the 20th of March 2020 in an effort to prevent massive job loss as a result of the Corona-virus. Employers who are registered for PAYE online have an option to claim up to 80% of their employees wages, pension and NI contributions while the employees are on furlough. If you use an agent to process PAYE online for you they can always help you apply for this scheme. You can also claim yourself by accessing PAYE online using your Government Gateway ID.
- VAT and Income Tax payment deferrals: N/B: The VAT payments deferral scheme ended on 30 June 2020.
- Small Business rate relief grants: For UK Businesses in receipt of small business rate relief and occupy property. the support is in the form of a £10,000 one-off grant from your local council. If you use more than one property, you can get a grant per property but you are not eligible if your property is a car park, parking space or used personally like beach huts, private stables and moorings. To benefit from this, you don’t have to do anything as long as you’re eligible, your local council (were you are registered as the ratepayer) would reach out to you and give instructions on how to put in your claim, If you believe you meet the eligibility criteria and have not received any correspondence, contact your local council. The grant doesn’t have to be repaid but it is taxable.
- The Retail, Hospitality and Leisure Grant Fund (RHLGF): The retail and hospitality sectors are arguably the hardest hit by the pandemic with the restrictions in travel leading to a huge drop in business and leisure travelers. This is recognized and why this fund was setup. If your business is based in England, operates in the retail, hospitality or leisure sector and had a rateable value of under £51,000 on 11 March 2020, you are entitled to a one-off grant of up to £25,000 depending on the value. Businesses which qualify for this are those being used as a retail, hospitality or leisure venue (not personal use) such as a restaurant, café, bar/pub, shop,cinema or live music venue, estate agent or letting agency, bingo hall, sports club, gym or spa, hotel, guest house or self-catering accommodation and you can get a grant on each property you own. Like the small business rate relief grant above, your local council would contact you if you are eligible.
- Local Authority Discretionary Grants Fund: For small and micro Businesses with relatively high ongoing fixed property-related costs which are not eligible for other grant schemes such as the retail, hospitality and leisure grant as well as the small business rate relief grant, you can get a grant of £25,000, £10,000 or any amount under £10,000 with this scheme. If your business is insolvent, in administration or is in the process of being struck off the register, you would be unable to apply but if it was trading on 11 March 2020 and occupies property (or part of a property) with a rateable value or annual mortgage/rent payments below £51,000, you might be eligible. Priority for these grants is being given to market traders, Bed & breakfasts that pay council tax rather than business rates, businesses in shared offices or other flexible workspaces, such as units in industrial parks or incubators and charity properties which get charitable business rate relief. You can contact your local council to apply for this.
- Self-Employment Income Support Scheme(SEIS): If you operate your business as Self Employed or through a partnership, then this is for you. The scheme currently allows you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single installment covering 3 months’ worth of profits, and capped at £7,500 in total. This is time sensitive as you must make your first claim before the 13th of July 2020! The grant doesn’t need to be repaid though it is taxable and if you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist. You can check online to find out if you’re eligible to make a claim for the first grant with your Self Assessment Unique Taxpayer Reference (UTR) number and National Insurance number. If you are eligible, you can make a claim.
- COVID-19 Corporate financing facility: This is for larger Businesses who have taken out short term debt and have been affected by the coronavirus pandemic. Since the pandemic is highly likely to throw off financial projections and impact ability to repay such facilities, the UK government is able to ensure liquidity by buying off such facilities through the Bank of England.
Hopefully these are useful. You can find other options as well for self employed and larger corporations by using the Gov.UK coronavirus support finder. You can also find COVID-19 support from other organizations here.