Government support for SMEs
This is a briefing on the UK Government’s support for SMEs in coping with the widespread disruption caused by COVID-19.
Last updated 29th April am
UK-wide measures include:
- The Coronavirus Job Retention Scheme which allows companies to claim for 80% of furloughed employees’ usual monthly wage costs.
- Bounce Back Loans which will will help small and medium-sized businesses to borrow between £2,000 and £50,000 with no fees or interest to pay for the first 12 months – approach an accredited lender.
- The Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance – approach one of the 40+ accredited lenders with a borrowing proposal.
- Temporary changes to VAT payments due between 20 March 2020 and 30 June 2020
- A Statutory Sick Pay relief package for SMEs – reclaim SSP through this government portal.
- The HMRC Time To Pay Scheme – call HMRC’s dedicated helpline on 0800 024 1222.
- Protection from eviction for commercial tenants (Eng, Wales, NI).
Measures for firms in England include:
- A Business Rate Relief for all retail, hospitality and leisure businesses in England – Contact your Local Authority
- The Retail and Hospitality Grant Scheme to provide businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property – If eligible, you will be contacted by your Local Authority
- Small business grant funding of £10,000 for all business in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief – If eligible, you will be contacted by your Local Authority
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 – If eligible, you will be contacted by your Local Authority
Similar support is available for businesses in Scotland, Northern Ireland, and Wales.
Coronavirus Job Retention Scheme (furlough)
The Coronavirus Job Retention Scheme (CJRS) is a temporary scheme open to all UK employers, currently scheduled to last until the end of March 2021.
Under the CJRS, employers are able to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month. Under the current shape of the scheme, the employer must pay the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
The Government has stated that employers will be able to claim via an online portal which HMRC has said will open on 20 April. In order to submit a claim via the Portal you will need:
Bounce Back Loans
Bounce Back Loans were announced on 27 April as a way to provide fast-track finance to small firms that need vital cash injections allowing firms to borrow up between £2,000 and £50,000. More information about the scheme can be found here.
Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years. Under the scheme, Government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs; the Government will not charge businesses or banks for this guarantee.
Businesses can access the first 12 months of that finance interest free, as Government will cover the first 12 months of interest payments. Banks cannot ask for a personal guarantee for loans of under £250,000.
To be eligible for support via the scheme, the small business must:
- operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see here)
- have a sound borrowing proposal, which the lender considers viable, were it not for the COVID-19 pandemic and will enable you to trade out of any short-term to medium-term difficulty
- be able to confirm that they have not received de minimis State Aid beyond €200,000 equivalent over the current and previous two fiscal years
Any small business interested in the scheme should, in the first instance, approach one of the 40+ accredited lenders with their borrowing proposal. The British Business Bank itself acknowledges that there is high demand for CBILS facilities meaning that phone lines are likely to be busy and branches may not be able to handle enquiries in person.
The Government has announced it is setting up a separate lending facility, with a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. Further details will be provided in due course.
- a Government Gateway ID and password – you can apply for one online
- be enrolled for PAYE online – you can enrol here
- the following information for each furloughed employee: Name, National Insurance number, Claim period and claim amount, PAYE/employee number (optional).
- if you have fewer than 100 furloughed staff – you will need to input information directly into the system for each employee. If you have 100 or more furloughed staff – you will need to upload a file with information for each employee.
HMRC guidance on whether your company is eligible for the CJRS is available here.
Further HMRC guidance on the scheme is available here. This includes information on what actions directors can carry out while they are themselves in furlough.
Coronavirus Future Fund
The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. The scheme is targeted at those businesses that rely on equity investment and are unable to access the CBILS scheme.The Future Fund will launch in May 2020. Further details about this scheme will be published shortly. The expected headline terms for these loans are available here.
VAT Payment Deferral
All UK VAT registered business that have a VAT payment due between 20 March 2020 and 30 June 2020, now have the option to:
- defer the payment until a later date
- pay the VAT due as normal
If you choose to defer your VAT payment as a result of coronavirus, you must pay the VAT due on or before 31 March 2021.
You do not need to tell HMRC that you are deferring your VAT payment.
Statutory Sick Pay Relief
The Government has announced that it will bring forward legislation to allow SMEs to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
- employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note
- eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force
The Government has stated it will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
Business Rates Discount
The Government will introduce a business rates retail holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible. A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
Those businesses eligible for the newly expanded retail discount and/or the new pubs discount may need to apply to their local authority to receive the discount. Any enquiries on eligibility for, or provision of, the reliefs should be directed to your relevant local authority. Guidance for local authorities on the application of the expanded retail discount is available online.
Retail and Hospitality Grant Scheme
Under the scheme, businesses in retail and hospitality with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000. Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for 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 or leisure sector
- your business has a rateable value of under £51,000
Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest and boarding premises and self-catering accommodation
Any enquiries on eligibility for, or provision of, the reliefs should be directed to your relevant local authority.
Support for businesses who pay little or no business rates
The Government will provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no business rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £3,000 to business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. If your business is eligible for SBRR or Rural Business Rate Relief, you will be contacted by your local authority – you do not need to apply. Funding for the scheme will be provided to local authorities by Government in early April.
HMRC Time to Pay
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 case-by-case basis and are tailored to individual circumstances and liabilities.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
How the IoD can help
The IoD is in continuous contact with Government Ministers and key civil servants, and continue to welcome any information, or any questions you want asked.
You might also find it useful to refer to the IoD’s explainer on government support for the self-employed, contractors and consultants announced as a response to the Coronavirus outbreak.
Government guidance for employers and businesses