The latest British Chambers of Commerce (BCC) Coronavirus Business Impact Tracker has revealed that “a concerningly high number of businesses are still finding accessing (CBILS) the scheme too complex and too lengthy. The government and financial institutions must continue to work together to identify practical steps to improve the workings of the CBILS scheme to ensure that cash gets to the frontline as quickly as possible.”

Businesses are reporting a high level of awareness of the government’s support schemes and, according to UK Finance £2.8 billion has been dished out to SMEs in the form of CBILS lending. Over 9,000 loans have been provided in the period 14-21 April bringing the total number of loans up to more than 16,600.

Although there has been criticism levelled at the government that it is not doing enough to support small and medium sized businesses through the COVID-19 crisis and the critical negative impact that it is having on businesses big and small in almost every sector, the signs are that the initiatives designed to help businesses with a number of business-critical issues are delivering.

So, what are these initiatives?

• Dealing with business rates
• Loans to help with Cash flow
• Tax payment deferment
• Self-employment income support scheme
• Job retention scheme
• Government support finder

Dealing with business rates

The government has initiated business rates holidays which should go some way to helping SMEs in the sectors hardest hit by COVID-19. Businesses in the hospitality, leisure, retail and early years education sectors such as nurseries are being granted 12-month business rate holiday from April 2020 for the 20/21 tax year. New rates bills will be issued by local authorities and business owners are not required to take any further action.

There are also grants available which are being administered via local authority websites for £10,000 for businesses with commercial properties who are in receipt of small business rate relief or rural rate relief. For businesses in hospitality, leaisure and retail, there is a grant of either £10,000 or £25,000 depending on the rateable value of your property (maximim rateable value £50,999)

Loans to ease cashflow difficulties

The key government scheme for SMEs is the Coronavirus Business Interruption Loan Scheme (CBILS), which was introduced in March and subsequently updated.

CBILS offers:

• £25k to £5m facility
• 80% government guarantee to lenders
• No arrangement or guarantee fees for smaller businesses
• 12-month interest free repayments
• Terms up to 6 years – overdraft and invoice facilities up to 3 years
• Unsecured lending up to £250,000 i.e. no personal guarantees

It is vital that you remember that if you borrow via the scheme that you will remain 100% liable for the debt.

Click here to find a list of accredited lenders.

There are a number of criteria that you must meet in order to be eligible for CBILS. They are:

• The loan must be for business purposes
• The business turnover must be below £45m
• The business must generate 50% of its turnover from trading
• The CBILS backed facility must be used to support primarily trading in the UK
• Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

There are some businesses which are not eligible for a CBILS loan:

• Banks and Building Societies.
• Insurers and Reinsurers (but not insurance brokers).
• The public sector including state funded primary and secondary schools.
• Employer, professional, religious or political membership organisations.
• Trade unions.

There are currently 48 accredited lenders to the scheme including regional and specialist lenders, but not all lenders are taking on new customers.

Tax payment deferment

If you are having difficulty with any of your VAT and Income Tax payments as a result of COVID-19 then read on. HMRC has deferred payment on VAT payments which are due between 20th March to 30th June 2020 with the payment not due until 31st March 2021. In addition, self-employed Income Tax payments due 31st July 2020 are now deferred to 31st January 2021. There is no interest due on these payments, you should continue to file your tax returns, but cancel your direct debits.

HMRC has also introduced a Time to Pay service which is open to all businesses and self-employed people with outstanding liabilities on PAYE, Corp Tax or VAT.

Self-employment income support scheme

If you are self-employed there is a scheme for you. The government published guidance on 26th March 2020 outlining details of a scheme that allows you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months.

To apply you must meet the following criteria:

• You are self-employed or member of a partnership; and
• Have Income Tax Self-Assessment (ITSA) tax return for 2018/19; and
• Traded in tax year 2019/20; and
• Are trading or would be except for COVID-19; and
• Intend to continue to trade in tax year 2020/21: and
• Your average profits over the last 3 years are less than £50,000
• You must have submitted your 2018/19 ITSA tax return before 23rd April 2020

Job Retention Scheme

This is for you if you are an employer. Launched on 20 March 2020 by the Chancellor Rishi Sunak, the Job Retention Scheme is intended to support employers so that they can continue paying employees who would otherwise be made redundant or put on a period of lay-off as a result of the COVID-19 pandemic. It is open to all employers regardless of company type, so it also includes sole traders and charities.

Under the Job Retention Scheme, if a worker is designated as a “furloughed worker” then the employer may claim a grant from HM Customs and Revenue (HMRC) to reimburse them for 80% of the wage costs relating to the worker, up to a maximum of £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions of 3%. Payments can be backdated to 1 March 2020.

The worker should not perform any work for the employer while on “furlough leave” and it is not available for employees therefore who are working from home and receiving payment for this work, off sick or self-isolating based on medical advice. The one exception to this is if the worker is shielding.

Unless the employer has a contractual right to lay off workers it will need to obtain the worker’s agreement to be placed on furlough leave. Then, once workers have been designated, the employer will need to submit information to HMRC.

You do not have to top up the worker’s wages so they are paid in full, but you can choose to do so, however holiday pay must be paid in full. And if you have not offered this to your employees, they may request to be furloughed as part of the Job Retention Scheme, but you will need to agree.

The system came online this week and will be open until end of June, it may be extended. Only one submission may be made per calendar month.

Government Support Finder

Use the Government Support Finder to discover what support you are eligible to receive.