Sources of financial assistance for businesses during COVID-19 ​

06 October 2020 - Elizabeth Nichols

Over the last few months, the government have introduced a number of grants, loans and support measures to help businesses affected adversely as a result of COVID-19. These schemes have been created to support as many businesses as possible and have sometimes been tailored specifically to those sectors and businesses hit the hardest.

Coronavirus Job Retention Scheme (CJRS)
The CJRS enables employers to furlough their employees and claim back a proportion of their wages to ensure that employees receive 80% of their wages for the time they are furloughed. Applications to furlough employees closed in June, and the percentage of government assistance has been reducing each month. For October the percentage available to claim back reduces to 60% up to a cap of £1,875. Employers must also pay National Insurance and pension contributions.

This scheme ends on 31 October 2020 and will be replaced by The Job Support Scheme (see below)

Job Support Scheme
This is a new scheme which will offer government grants of up to 22% of the salaries of employees working part time, where the government contribution has not been capped, because of the impact of COVID-19. An employer needs to pay their employee for the hours they work at their normal rate of pay, and for the hours that they don’t work the government and the employer will each pay one third of the remaining salary. The result should be that employees will be paid 77% of their wages (subject to the cap below) if they work a third of their usual hours, as their employer will pay 55% of their salary and 22% paid by the government.

The government will cap their contribution at £697.52 a month per employee (compared to the furlough scheme of £2,500 per month) and employers will need to pay National Insurance and pension contributions as normal. Employees must work for at least a third of their usual hours for the first three months of the scheme.

Hours employee worked 33% 40% 50% 60% 70%
Hours employee not working 67% 60% 50% 40% 30%
Employee earnings (% of normal) 78% 80% 83% 87% 90%
Government grant (% of normal wages) 22% 20% 17% 13% 10%
Employer cost (% normal wages) 55% 60% 67% 73% 80%

The Job Support Scheme starts on 1 November and will run for six months. Payments will be made one month in arrears. All UK employers with a UK bank account and UK PAYE schemes can claim support from the scheme, and the portal will open on 1 December. Businesses do not have to have participated in the previous CRJS (furlough) scheme in order to sign up to this new initiative. Large employers will need to undertake a financial assessment test to show that their turnover has been impacted adversely by COVID-19, although it is presently unclear what the test will be.  In addition, the Job Support Scheme factsheet states that the government expects that large employers will not be making capital distributions, such as dividends or share buybacks if using the Job Support Scheme.

As with the furlough scheme, the employee must agree in writing to the new working arrangement, and HMRC have made clear that they will be checking claims for fraudulent or incorrect information.

Statutory Sick Pay Rebates

If an employee has been off sick due to Covid-19 the businesses can claim back up to two weeks of Statutory Sick Pay (SSP) without having to provide any note from a GP. Employers must maintain records for staff absences and payments, and the scheme only applies to UK businesses with fewer than 250 employees as of 28 February 2020.

More information:

Time to Pay Scheme (deferring VAT payments until 2021 or 2022)

For Businesses – at the start of the pandemic, businesses could apply to defer VAT payments until 31.03.21, although applications for that scheme ended on 30 June 2020. If your business has deferred any VAT payments which would have been made between 20 March and 30 June 2020, the government has now given an option to spread VAT payments over the financial year of 2021-22 in eleven equal instalments. Businesses will need to opt in and HMRC will give more details on that process shortly.

For Self-assessment  – for those that deferred their tax payment ordinarily due in July 2020 to 31 January 2021, the government has now given an option to extend the due date. If you have up to £30,000 of self-assessment liabilities, the Time to Pay facility allows an individual to secure a plan to pay over an additional twelve months, meaning that self-assessment returns that were due in July 2020 will not need to be paid in full until January 2022. Individuals with self-assessment debts of over £30,000 can also use Time to Pay but will need to contact HMRC to agree a payment plan.
In both cases a Direct Debit will need to be set up so that VAT returns are filed regularly, over a twelve-month period.

More information

Discretionary Grant Fund

Grants of £10,000, £25,000 or any amount under £10,000 are available through local councils to small (and micro) businesses based in England with fixed property costs and a rateable value of less than £51,000 who do not qualify for other schemes (such as the Small Business Grant Fund).  Grants are made at the discretion of the local council and you should check with your local council for details of their scheme. The grant does not have to be paid back but it is taxable.

This fund is particularly suitable for guest house and bed and breakfast businesses who pay council tax rather than business rates, small businesses in shared office spaces and charity properties getting charitable business rates relief.

More information on your local council’s website – please note applications in many areas (such as Ipswich) have now closed.

Small Business Grant Fund

One-off cash grants of £10,000 are available to small businesses (in England) who pay little or no business rates. As with the Discretionary Grant Fund, the payment is made through the local council, and is open to businesses who occupy property and were eligible for small business rate relief or rural rate relief on 11.03.2020. Some small businesses such as private stables and moorings are ineligible, and you cannot claim the Small Business Grant Fund and the Small Business Grant Fund and the Retail, on the same property. Grants are made through the local council, who should have already contacted you if you are eligible.

More information

Retail, Hospitality and Leisure Grant

This one-off cash grant is aimed at businesses in this sector. Smaller businesses with a rateable value of £15,000 or under can claim for a grant up to £10,000 and larger businesses with a rateable value of over £15,000 (but under £51,000) may be eligible for a grant of £25,000. The grant does not have to be paid back, but it is taxable. Eligible businesses can receive one grant per property, and you cannot claim this grant and the Small Business Grant on the same property. Grants are made through the local council who should have already contact you if you are eligible.

More information

Kickstart Scheme

The Kickstart Scheme aims to create new six-month job placements for young people who are currently on Universal Credit. Government funding is available for 100% of the relevant National Minimum Wage for 25 hours a week, plus associated employer National Insurance contributions and employer minimum automatic enrolment contributions. There is also £1,500 per job placement available for setup costs, support and training.

Applications must be for a minimum of 30 job placements. If your business is unable to offer this, you can partner with other organisations to reach the minimum number. Any organisation can apply for the scheme, but the job placements created must be new jobs. They must not replace existing or planned vacancies or cause existing employees or contractors to lose or reduce their employment. The roles funded through the Kickstart Scheme for must be:

  • a minimum of 25 hours per week, for six months
  • paid at least the National Minimum Wage for their age group
  • should not require people to undertake extensive training before they begin the job placement

More information

Scheme ends December 2021

Coronavirus Business Interruption Loan (CBIL)

Businesses can apply for a government backed temporary loan, overdraft, invoice finance and asset finance of up to £5 million for up to ten years. To apply you must have a borrowing proposal which would be viable, were it not for the Covid-19 situation. You must also self-certify that Covid-19 has adversely affected your business. SMEs may also be eligible for Business Interruption Payment to cover the initial 12 months of interest payments and any lender fees. The CBIL is also open to self-employed people.

More information

Deadline to apply is 30 November 2020

Bounce Back Loan Scheme (BBLS)

Available to SMEs affected by coronavirus, who can apply to borrow between £2k and £50k. The government guarantees 100% of the loan and no fees or interest payments are due for twelve months. As with other government loan schemes, you must declare that your business has been adversely affected by Covid-19 and also that your business was not ‘undertaking in difficulty’ as of 31 December 2019. This loan is also available to the self-employed, but you cannot apply if you’re already claiming under the CBIL (above).

More information

Applications close 30 November

Pay as You Grow Scheme

Announced as part of the Winter Economy Plan, this latest scheme aims to provide flexibility for businesses who took out loans during the COVID-19 pandemic. Measures will include extensions to repayments of Bounce Back loans from six to ten years and allowing businesses who are in difficulty to make interest-only repayments or suspend payments entirely for up to six months.

Full details of the scheme have not yet been announced.

Extension of VAT reduction for hospitality, holiday accommodation and attractions

The previous reduction in VAT for business within the hospitality sector has been extended to 31 March 2021. This will allow VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to hospitality (restaurants, cafes and pubs), holiday and hotel accommodation and admissions to some attractions such as cinemas, theatres, museums and exhibitions.

More information

Local sources of funding include

Growth through Innovation Fund from New Anglia LEP which covers Norfolk and Suffolk. This has been designed to provide funding for local SMEs to help with research and development projects. Companies can apply for £1,000 – £25,000 grants to help towards 50% of the total cost of a project. The grant can be used to purchase of equipment, software and licences, specialist researchers and technicians, Intellectual Property costs, materials and consultancy. Grants are awarded on a discretionary basis and are subject to eligibility checks and approval.

More information

Business Resilience and Recovery Scheme from New Anglia LEP which covers Norfolk and Suffolk. This scheme provides funding for business that have been affected by COVID-19 and are looking at ways to recover and strengthen their business performance through investment projects that will have a significant impact on their business. The scheme will pay for up to 50% of capital costs between £25k up to a maximum of 50k. To be awarded the minimum of £25,000, total capital project costs of at least £50,000 must be evidenced.

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