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Government Support for UK Business: A Summary - 23/02/2020
As today marks the launch of the government’s Coronavirus Business Interruption Loan Scheme, we thought it a good time to give you a bit of a summary of the various announcements made by Boris Johnson or Rishi Sunak over the past week or so.
There isn’t anywhere else to start other than the ‘Job Retention Scheme’, really. This unprecedented piece of legislation has been making the headlines not just in the UK, but globally, and rightly so, too.
- The scheme gives UK businesses the right to claim a grant to cover 80% of wages (max. £2,500 per month) for those employees that cannot come into work due to the virus, but remain on the payroll.
- It’s open to businesses of all sizes, and across all sectors.
- Payments will be backdated to the 1st of March 2020, with the initial plan being that they will run for three months.
- The Chancellor announced that there is no limit to the funding this scheme will be given.
As well as the far-reaching Job Retention Scheme, which focuses on supporting the ‘employed workforce’, provisions have also been made for small business owners, as well as the self-employed.
- The Coronavirus Business Interruption Loan Scheme (CBILS), in force as of this morning, offers the potential to borrow up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
- Without going too deeply into it, CBILS provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
- On top of this, any ‘VAT quarter payments’ due from now until the end of June will be deferred and businesses will have until the end of the financial year to repay those bills.
The reaction from the business world has been one of positivity and of hope, with Suren Thiru, Head of Economics at the British Chamber of Commerce, has made the following comments on the CBILS:
"The Coronavirus Business Interruption Loan Scheme is a crucial step in getting credit flowing to firms who urgently need it during this difficult period. The inclusion of an overdraft facility in the scheme is particularly welcome to those who are facing an immediate and significant loss of cashflow.
We look forward to working with the British Business Bank and UK financial institutions to ensure that the scheme delivers cash to the front line as quickly as possible.” [Source: britishchambers.org.uk]
Finally, the rule changes introduced to support the self-employed also comes in the form of deferring tax payments;
- Self-employed individuals can defer their tax payments for six months, which means they now fall due on the 31st of January 2021.
If you’re a small business owner and you want a helping hand going through the above, we’ve got a dedicated Corporate Finance department who’d be more than happy to talk you through things.
Equally, if you’re not a small business owner, but maybe you think it’d be worthwhile having a chat about your own finances during these uncertain times, please don’t hesitate to get in touch. We’re still carrying on with business as best as we can, utilising the power technology as and when possible.
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