As Government measures are being announced frequently, outlining the numerous schemes and support available, it may be difficult to find the information relevant to you and your business. We have therefore devised the below summary of the key government initiatives aimed at helping businesses.
In Brief
The main initiatives are as follows;
- Coronavirus Business Interruption Loan Scheme (CBILS)
There are strictly speaking two schemes – CBILS and CLBILS. CLBILS is one for larger (£45m plus turnover) and CBILS is the one aimed at SME’s.
The SME scheme (which we focus on below) is to facilitate access loans, overdrafts invoice and asset finance.
Operated via accredited lenders which includes all major banks in the UK
- COVID 19 Corporate Financing Facility (CCFF)
Aimed at helping companies with their cash flows as an alternative to market-based finance for their working capital.
It works by the Bank of England buying short term debt from companies.
Its primary focus is on large companies.
- Business Rates Support.
Targeted at retail, hospitality and leisure businesses.
Provides a business rates holiday for 2020-21 tax year
- Grants for Retail, Hospitality and Leisure sectors
Cash grants of up to £25,000 per property occupied by businesses in these sectors
(a similar scheme is to be offered for businesses operating nurseries)
- Statutory Sick Pay (SSP) Support
SME’s to be able to reclaim SSP paid for sickness absence due to COVID-19
- VAT Deferment scheme
All businesses with a VAT payment due between now and the 30th June have the option to defer.
- Time to Pay Services
All businesses paying tax to be eligible for support through HMRC Time To Pay service.
- Coronavirus Job Retention Scheme
Updates are regular, please refer to our guidance on furlough here.
In More Detail
- Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme (CBILS) is being offered by all major banks, to provide financial support to smaller businesses across the UK offering eligible SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million.
The CBILS opened on 23 March 2020 and will initially run for a period of 6 months. The repayment terms of the facilities on offer vary depending on what facility is provided, with the maximum repayment term being 6 years. Some lenders are also offering unsecured lending facilities of up to £250,000 under the CBILS, but this is at their discretion.
The government have agreed to make a Business Interruption Payment to pay the first 12 months of interest and any lender-levied fees, meaning businesses will have lower initial repayments until their cash flows hopefully re-stabilise. For each loan, the government will also provide lenders with an 80% guarantee, giving the lenders further confidence and comfort to continue providing the loans to provide eligible SMEs the funds they need to continue their businesses during these turbulent times.
In order to be eligible to apply for the CBILS:
- your application must be for business purposes;
- your business annual turnover must be no more than £45 million per year;
- your business must generate more than 50% of its turnover from trading activity; and
- you must have a borrowing proposal that the lender would deem viable if not for the current pandemic, and the lender must believe that by making facilities available, it will enable you to trade out of any short-to-medium term difficulty.
Some sectors cannot apply for the CBILS and they include banks and building societies, insurers and reinsurers, public sector organisations, trade unions, employer professional, religious or political, membership organisations.
How do I apply to the schemes?
To apply for the scheme either talk to your bank, or search the British Business Bank’s website (to find accredited lenders who are offering the CBILS.
Be aware that even with the government-backed guarantee, your business will remain 100% liable for the debt; the government guarantee is to the lender, not to the business.
As it was initially proposed the scheme was only available to small businesses unable to secure regular commercial financing, which amongst other things meant demonstrating that a conventional lender would not provide finance (and therefore had to go through a process to demonstrate this. However, this meant that two weeks after its announcement only 983 companies from 130,000 applicants had had their loans approved. The scheme has therefore been revised to abandon this qualification and its now simply available to all businesses who self-certify that they have been adversely affected by the pandemic.
Lenders cannot ask for personal guarantees for loans up to £250,000 but can in excess of that figure (and they will) but only up to 20 of any amounts outstanding under the CBILS and this cannot take into account the family home.
- COVID-19 Corporate Financing Facility (CCFF)
The scheme is to support larger businesses funded through the Bank of England (BoE), which will operate a new lending facility to “non-financial” businesses experiencing cash flow issues due to Covid-19.
The idea behind the scheme is to provide funds to eligible businesses in order to assist them paying wages, suppliers and assist their cash flow during the Covid-19 crisis by providing a quick and cost-effective way to raise working capital.
It is a credit easing scheme underpinned by the purchase by the Bank of England of newly issue “Commercial Paper”.
In this context “Commercial Paper means an unsecured short-term debt instrument issued by a company which matures in up to 12 months. There is currently no limit on the amount a company can apply for.
The intention is that under the CCFF, the BoE will buy short term debt from larger companies for at least 12 months, on terms comparable to those prevailing in markets before the Covid-19 crisis. Essentially, the way in which the CCFF will operate is by a company issuing ‘commercial paper’ that the BoE will purchase.
The minimum loan amount available under the CCFF is £1 million, with the maximum to be confirmed by the BoE.
The CCFF is aimed at larger business organisations and is accessed directly via the BoE.
To be eligible the following must apply:
- the company must be a UK incorporated company (this includes those with foreign-incorporated parent companies);
- the company must make a material contribution to the UK economy. The guidance suggests that companies meet this criterion if they:
- have a genuine business in the UK;
- have significant employment in the UK; or
- have their headquarters in the UK.
When assessing eligibility with regards to ‘material contribution to the UK economy’, the CCFF will also consider whether companies:
- generate significant revenue in the UK;
- serve a large number of customers in the UK; or
- have a number of operating sites in the UK; and
- the company must be able to show that they were in a stable financial position before the Covid-19 disruption. The BoE will look at the company’s credit rating pre Covid-19 to see if they had a short or long-term rating of investment grade as at 1 March 2020. If the company does not have an existing credit rating, they could either:
- contact their bank to see if they would view their rating as equivalent to investment grade as at 1 March 2020 before contacting the BoE to make further enquiries regarding their eligibility; or
- contact one of the major credit rating agencies (as noted on the BoE website) for an assessment of credit quality for the purposes of applying for the CCFF.
For information on how to apply for the CCFF please visit the BoE website at
A further “hybrid loan scheme to sit between the CBILS and CCFF is also expected to be announced by the Chancellor within the next week.
- Support with Business Rates
- Retail, Hospitality and Leisure Sectors
A payment holiday in relation to business rates payable by those in the retail, hospitality and leisure sectors in England for the 2020-2021 tax year.
In order to benefit from the payment holiday, properties must be occupied (note that this includes premises temporarily closed following the government’s advice in response to Covid-19), and wholly or mainly used:
- as hotels, guest boarding and self-catering accommodation.
- as restaurants, shops, cinemas, cafes, live music venues and drinking establishments; and
- for assembly and leisure.
Those eligible will not need to apply for the payment holiday, but your local authority may need to reissue your bill in order to provide the relief. No timescale has been provided for the reissuing of business rate invoices by local authorities, but the government has confirmed that they will do this ‘as soon as possible’.
For a non-exhaustive list of businesses that may be eligible for a payment holiday in relation to business rates visit the government’s Expanded Retail Guidance website
- Nursery Businesses
The government will also be introducing a business rates holiday for nurseries in England for the 2020-2021 tax year.
The payment holiday will apply to properties occupied by providers of Ofsted’s Early Years Register and which are wholly or mainly used for the Early Years Foundation Stage.
You do not need to do anything to access the payment holiday if you are eligible, however, your local authority may need to reissue your invoice and according to the government guidance, this will be done ‘as soon as possible’.
- Businesses paying little or no Business Rates
The government will be providing additional Small Business Grant Scheme funding to support small businesses in England, by offering a one-off grant of £10,000 to businesses that pay little or no business rates due to small business rate relief, rural relief and tapered relief (the Small Scheme).
Am I eligible for the small scheme?
To be eligible for the Small Scheme, you must be a business that occupies property and must have received small business rate relief or rural rate relief as of 11 March 2020. Your local authority will write to you if you are eligible for the grant.
- Cash Grants: Retail, Hospitality and Leisure Businesses
Businesses in England in retail, hospitality and leisure sectors could be eligible for the Retail and Hospitality Grant Scheme, which could provide eligible businesses with a cash grant of up to £25,000 per property (the Scheme).
Businesses in the retail, hospitality and leisure sectors must have a rateable value of under £51,000 and the properties must be occupied and wholly or mainly used:
- as hotels, guest boarding and self-catering accommodation;
- as restaurants, shops, cinemas, cafes, live music venues and drinking establishments; and
- for assembly and leisure.
The grants available under the Scheme are as follows:
- a grant of £10,000 may be available to businesses in the above sectors who have a property with a rateable value of up to £15,000; and
- a grant of £25,000 may be available to businesses in the above sectors who have a property with a rateable value over £15,000 and less than £51,000.
Your local authority will write to you if you are eligible for the Scheme.
- Paying Statutory Sick Pay to Employees with coronavirus symptoms
The government will be implementing legislation which will enable small and medium sized UK businesses, employing fewer than 250 employees as of 28 February 2020, to claim back any Statutory Sick Pay (SSP) paid in relation to Covid-19 absences.
Employers should note the following in relation to reclaiming SSP paid in relation to Covid-19 absences:
- you will be entitled to recover up to 2 weeks’ SSP per employee who has been absent due to Covid-19 (absences due to Covid-19 include those self-isolating with symptoms or those self-isolating due to someone in their household having symptoms);
- employees will not be required to provide a GP fit note, but you should maintain records of staff absences and payments of SSP. If you require evidence from your employees, those with Covid-19 symptoms can provide an isolation note available on the ‘NHS 111 Online’ website and those living with someone with symptoms can provide a note from the NHS website; and
- the regulations will have retrospective effect and employers will be able to reclaim SSP with regards to any Covid-19 related absences as of 14 March 2020.
As the legislation has not yet been passed, further details will be established once they have been put in place, and the government will work with employers to set up repayments as soon as possible.
- Deferring VAT payments
Any UK businesses registered for VAT who have a VAT payment due between 20 March 2020 and 30 June 2020 (Deferral Period) can opt to defer the payment. Businesses do not need to inform HMRC that they will be deferring their VAT payment but bear in mind that VAT returns still need to be submitted to HMRC on time.
Any deferred VAT payments must be paid on or before 31 March 2021. HMRC will not charge interest or penalties on any deferred payments but currently, any VAT due after the Deferral Period will still need to be paid as normal.
- Time to Pay services
Businesses and those who are self-employed who owe tax may be entitled to receive support regarding their outstanding liabilities via HMRC’s Time to Pay service.
There’s no set criteria as to who can apply and support is provided on a case-by-case basis, so if you have any outstanding tax payments or think you may miss your next tax payment as a result of the Covid-19 crisis, you can contact HMRC to find out whether you are eligible for assistance.
You can call HMRC’s dedicated helpline on 0800 024 122.
Check your commercial insurance policies.
It is imperative for businesses to be checking any business insurance policies they have to establish whether they can claim for any business disruption they may be experiencing due to Covid-19.
Whilst it is unlikely for a business insurance policy to cover pandemics and the current Covid-19 crisis, they may cover other potential areas such as government ordered closures and unspecified notifiable diseases (Covid-19 was added to the Government’s list of notifiable diseases on 5 March 2020)
So, if your business has been ordered to close, or if you have notifiable diseases cover, it is worth checking your policies and contacting your policy providers to see whether you are covered.
Even if your policies do not cover these events, we would still recommend checking the terms as there could be other potential claims you can make under your policies during these unprecedented times.
Self-employment Income Scheme and the Coronavirus Job Retention Scheme
You can also read our previous posts about the support available for the self- and the Coronavirus Job Retention Scheme
Please be aware that the support available to businesses in Scotland, Wales and Northern Ireland may differ, therefore, please visit the relevant government pages below to see what support may be available in these areas:
How can DTM Legal help?
We would also advise checking your insurance policy to see if there is any applicable business interruption cover (although pandemics will more often than not be an excluded risk).
We understand there is a lot of information to digest. If you have any further questions, please do not hesitate to contact our corporate and commercial team who can help and support your business through this time of need. We are in this together.
