Coronavirus business support: Guidance for business owners
Businesses that are struggling financially as a result of coronavirus can receive assistance from the large package of government business support that is now available, as well as taking other steps to relieve their financial pressures.
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Businesses across all sectors have been affected in some way by the COVID-19 pandemic. To minimise the long-term impact and to help businesses survive this challenging period, the government has released a significant package of coronavirus business support.
Intended to help SMEs, larger businesses, businesses in some of the most affected industries, and the self-employed, this business support can assist with ongoing costs and provide relief to ease any financial pressures.
Our guide highlights the help that is available to businesses and what actions they can take to tide them over during the COVID-19 outbreak.
The information on the government support is relevant to England. Wales, Scotland, and Northern Ireland will offer similar, if not the same measures, but there may be some differences so it is worth businesses in these nations checking their particular government website.
Hospitality, retail, and leisure businesses
All businesses within the hospitality, retail, and leisure industry are eligible for a business rates holiday for the 2020-21 financial year. Nurseries are also exempt from paying business rates for this period.
Furthermore, there is a Retail, Hospitality and Leisure Grant Fund (RHLGF) available for businesses in these sectors with a rateable value of under £51,000. A grant of £10,000 is available to businesses with a rateable value of £15,000 or lower, and a grant of £25,000 is available to those with a rateable value above £15,000.
Small and medium enterprises (SMEs)
The government is providing a Small Business Grant Fund (SBGF) to businesses that already receive Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR). Eligible businesses can receive a grant of £10,000.
See our guide to coronavirus business grants for further information on this scheme and the other grants available.
Support for your employees
If your business is struggling and you’re finding it difficult to pay the wages of your employees, the Coronavirus Job Retention Scheme could help. The scheme was initially for a period of 4 months from 1 March 2020, but on 12 May this was extended to 31 October 2020.
It means that you can keep employees on your payroll as "furloughed workers", rather than laying them off. HMRC will then reimburse the cost of 80% of each furloughed worker’s wages, up to £2,500 a month, which can be backdated from 1st March. The chancellor has indicated that from August companies may be required to contribute to the scheme and that other changes will be made to allow employees to return to work part-time whilst on furlough.
You can claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.
Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.
The claim system went live on the HMRC website 20 April 2020 and HMRC aims to make payments in respect of validated claims within six days of a claim being made
All businesses that use the pay as you earn (PAYE) system will be eligible for this relief.
If you pay yourself a salary through your own company’s PAYE system, you are eligible for the Job Retention Scheme.
Businesses can also be reimbursed for any Statutory Sick Pay (SSP) that they pay to employees who have to take time off because of coronavirus. Employers can reclaim up to 2 weeks of SSP per employee, whether the employee has the virus themselves or are required to self-isolate.
Coronavirus support for the self-employed
The government announced some long-awaited support for the self-employed during this crisis. Similar to the Job Retention Scheme, self-employed workers can reclaim up to 80% of their profits, up to a maximum of £2,500 a month for an initial period of 3 months. The sum will be calculated from a self-employed worker’s average profits from the previous 3 financial years.
Self-employed workers may not receive their payments until June, but in the meantime, they can claim universal credit.
This scheme is only available to self-employed workers with an annual trading profit of up to £50,000.
Coronavirus Business Interruption Loan Scheme (CBILS)
There is a special loan scheme to help businesses with a turnover of under £45 million that have been affected by COVID-19. Available through over 40 participating lenders, businesses can apply for funding of up to £5 million in the form of a loan, overdraft, invoice finance, or asset finance, with the government covering any fees and interest costs due in the first 12 months.
Bounce Back Loan Scheme
The coronavirus Bounce Back Loan scheme will help small businesses borrow between £2,000–£50,000 for up to six years. The Government will guarantee 100% of the loan and no fees or interest will be incurred within the first 12 months.
See our specialist guide for more information on how to apply for a coronavirus small business bounce back loan.
Support for big businesses
The government laid out a COVID-19 Corporate Financing Facility to help large companies address any cash flow issues. It involves the Bank of England buying short-term debt from these larger companies in the form of a commercial paper, with more information available from the Bank of England.
VAT and Income Tax
Any VAT payments that are due between 20th March 2020 and 30th June 2020 can be deferred to a later date.
Any Income Tax Self-Assessment payments that are due by 31st July 2020 can be deferred until 31st January 2021.
HMRC’s Time to Pay service can offer support to businesses and self-employed people facing financial difficulties. They may be able to receive help with their tax payments, but this will vary between individual cases.
If a business can’t pay their rent because of the impact of coronavirus, they will not be evicted. Should a business miss a rental payment up to 30th June, they are protected from eviction but will still be liable for the rent.
Mortgage payment holiday
Home owners and buy-to-let landlords can apply for a mortgage payment holiday from their lender. This will defer your mortgage payments, although you will continue to be charged interest. For more information, see our guide on how to apply for a mortgage payment holiday.
If a business is covered by their commercial insurance policy for government-ordered closures and pandemics (or unspecified notifiable disease), they should be eligible to make a claim, subject to their policy’s terms and conditions.
What other support is available?
As well as the government-backed Business Interruption Loan Scheme, businesses can apply for credit in the usual way. The scheme is specifically targeted at businesses that would struggle to be approved for finance in normal circumstances without the government guarantee; but if a business is eligible for a business loan without the help of the scheme, they will follow the usual application and approval process.
Businesses can either apply to their current bank, or to a different provider, including one of the many online lenders that have emerged in recent years. Online lenders often have a faster application process and may also offer more diverse products, so you can select one that best meets your needs.
For more information on the different lenders and for help on putting together an application, read our guide to applying for a business loan.
Some businesses may be able to benefit from free resources or extended free trials from certain companies. Some accounting apps and other business software are offering free access to some of their facilities, so it may be worth investigating if any of these can benefit your business.
Ask for help
Each business can also approach their suppliers, utility providers, and other companies they work with to see what help they can offer. You might get the option to defer payments or arrange a more flexible payment method, or any other form of support that could help ease financial pressures on your business.
In addition to the financial strain the COVID-19 outbreak is placing on businesses, it is causing a lot of stress and worry for business owners. Because of this, it is important for business owners to not neglect their mental health and seek support when they need it. Websites such as Mind have resources that can help you to manage your worries and offer advice on how to look after your mental health in this difficult and uncertain period.
Rhiannon is a financial writer for NerdWallet, with a particular interest in personal finance and insurance guides for consumers. Read more