Covid-19: assistance measures targeted at SMEs


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In this factsheet (which sets out the position as of 3 April 2020), we outline the eligibility requirements and key features of the following support specifically aimed at small and medium-sized enterprises (SMEs)  

  • British Business Bank emergency Coronavirus Business Interruption Loan Scheme 
  • Small Business Grant Scheme
  • Deferring VAT payments
  • Job retention scheme 
  • Statutory Sick Pay support 
  • Business rates holiday for retail, hospitality and leisure businesses 
  • Cash grants for retail, hospitality and leisure businesses 
  • Support for nursery businesses that pay business rates
  • Protection from eviction 
When reading, please bear in mind that everyone's situation is different and the pace of change in these extraordinary times may mean that other options and issues come to light that are not covered here. Please note that this article does not provide or constitute specific legal advice. However, please do contact us using the contact details at the bottom of the article if you would like advice on any of the matters covered. You can also find further assistance and guidance on our dedicated Covid-19 resource pages.
British Business Bank emergency Coronavirus Business Interruption Loan Scheme (CBILS) 
Eligibility (the initial rules were further relaxed on 3 April 2020)
  • Must be UK-based in business activity
  • With an annual turnover of no more than £45 million (a new scheme announced on 3 April 2020, the "Coronavirus Large Business Interruption Loan Scheme" (CLBILS) aims to support the "stranded middle companies" with an annual turnover of between £45 million and £500 million, whilst larger companies can seek to benefit from the Covid Corporate Finance Facility (CCFF)) 
  • Have a borrowing proposal which a lender would consider viable, were it not for the Covid-19 pandemic and believes will enable you to trade out of any short-term to medium-term difficulty
  • Self-certify that it has been adversely impacted by Covid-19
  • Applications will not be limited to businesses that have been refused a loan on commercial terms, thus extending the number who benefit 
The scheme is not available to: 
  • Banks and building societies
  • Insurers and reinsurers (however it is available to insurance brokers)
  • Public-sector bodies
  • State-funded primary and secondary schools
  • Further-education establishments, if they are grant-funded
Key features 
  • Operated via 40 accredited lenders including high-street banks, challenger banks, asset-based lenders, and smaller specialist local lenders – if one lender turns you down, you can still approach other lenders within the scheme, although given demand it is generally recommended that you approach your own existing bank first. A list of lenders is available on the British Business Bank website
  • Access to term loans, overdrafts, asset finance and invoice finance of up to £5 million for firms with an annual turnover of less than £45 million 
  • To prevent banks from pressuring businesses to sign commercial loans on unfavourable terms, the Government is extending the loan guarantees to all viable SMEs and not just businesses who couldn’t access a loan on commercial terms
  • The Government has removed the requirement for personal guarantees for CBILS where loans are below £250,000
  • Where loan requests are between £250,000 to the £5 million cap, the personal guarantees may be requested at the lender's discretion, however the guarantee excludes the guarantor's principle private residence and recoveries are capped at 20% of the outstanding loan after the proceeds of business assets have been applied. 
  • Whilst the Treasury has not capped the interest rates that lenders can charge, lenders have been warned not to charge excessive interest after the interest free period has passed and lenders will be asked to assure customers of a modest 'reversion rate'
  • Repayment terms are up to six years for term loans and asset finance facilities and up to three years for overdrafts and invoice finance facilities 
  • The Government will make a Business Interruption Payment covering the first 12 months of interest payments and any lender charges
  • As the borrower the business retains full liability for the debt, although, as above, lenders get a government-backed partial guarantee for the outstanding balance of the finance
  • Importantly, access to the scheme has now been opened up to smaller businesses facing cash flow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. You may therefore consider re-contacting your lender if you have previously been unsuccessful in securing funding. The expanded scheme will be offered by lenders from Friday 3 April 2020 and operational from Monday 6 April 2020 for a period of 6 months.

 Small Business Grant Scheme
Eligibility
  • Business based in England
  • Business occupies property
  • The business is already receiving small business rate relief or rural rate relief as of 11 March 2020 
Key features
  • Funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief
  • One-off grant of £10,000 available to help meet ongoing business costs
  • Any enquiries should be directed at your local authority 
  • Your local authority will write to you if you are eligible for this grant
 
Deferring VAT payments 
Eligibility
  • UK VAT registered business; and 
  • VAT payment due between 20 March 2020 and 30 June 2020.
Key features
  • Your business has the option to either defer the payment until a later date or pay the VAT due as normal.
  • HMRC will not charge interest or penalties on any amount deferred.
  • It does not cover payments for VAT MOSS or import VAT 
  • For VAT deferrals, no HMRC applications need to be made as the payment deferral is automatically in place.
  • VAT direct debits should therefore be cancelled for the relevant payments. 
  • VAT payments due following the end of the deferral period will have to be paid as normal. We understand that further information about how to repay the VAT that has been deferred will be available on the gov.uk website soon.

Job retention scheme 
Eligibility for employers
  • UK employers 
  • Must have created and started a PAYE payroll scheme on 28 February 2020 
Eligibility for employees
  • All employees including those who are: full-time, part-time, agency workers, on flexible/zero hour contracts (provided they are on your PAYE payroll)
  • The scheme also covers employees who were made redundant since 28 February 2020, if rehired
  • To be eligible, while on furlough, employees must not undertake any work (there are exceptional circumstances where they may carry out necessary roles (e.g. as a trustee to a pension scheme but please seek further legal advice in this regard). There are nuances in this and we suggest you seek legal advice in relation to any individual queries. 
Key features
  • Temporary scheme open for at least three months starting from 1 March 2020, but the Government has said this will be extended if necessary. 
  • Applies to all employment contracts (including apprentices). 
  • Employers can claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to a cap of £2,500 per month, in addition, you can claim the associated Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions payable on the subsidised wages paid to furloughed employees. Employers can "top up" the difference in salary.
  • The guidance does not set out a prescribed process for employers to take when furloughing employees, however we suggest that you take advice as to the process to be followed. Please refer to the guidance issued by our employment  team for further details. 

Statutory Sick Pay (SSP) support 
Eligibility 
  • UK-based businesses; 
  • With fewer than 250 employees as at 28 February 2020; and 
  • The eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force. 
Key features
  • Employers can  reclaim expenditure for any employee who has claimed and been paid SSP for sickness absence due to Covid-19, the refund will cover up to 2 weeks' SSP per eligible employee
  • Employees will not need to provide a GP fit note but employers should maintain records of staff absences and payments of SSP
  • Over the coming months the Government will work with employers to set up the repayment mechanism
 
Business rates holiday for retail, hospitality and leisure businesses 
Eligibility
  • Business is based in England 
  • Business is in the retail, hospitality and/or leisure sector 
  • With properties wholly or mainly used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues, or for assembly and leisure, or for hospitality, as hotels, guest & boarding premises or self-catering accommodation (please see the GOV.UK website for a prescribed list of eligible companies which was released on 2 April 2020)
Key features
  • The total amount of relief available for each property under the scheme is 100% of the bill  for the 2020 to 2021 tax year
  • NB the relief is not considered to be state aid
  • Local authorities are advised to apply this relief to eligible properties so no action is required of you. Local authorities may have to reissue your bill to provide this support, we understand this is underway
 
Cash grants for retail, hospitality and leisure businesses 
Eligibility
  • Business is based in England 
  • Business is in the retail, hospitality or leisure sector
  • Business has a rateable value of under £51,000
  • With properties wholly or mainly being used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues, or for assembly and leisure, or for hospitality, as hotels, guest & boarding premises or self-catering accommodation
Key features 
  • Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property
  • Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000, those with a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000
  • Local authorities will write to those eligible for this grant
  • Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority

Support for nursery businesses that pay business rates
Eligibility
  • Business is based in England 
  • With property occupied by providers on Ofsted’s Early Years Register or wholly or mainly used for the provision of the Early Years Foundation Stage and which are subject to business rates in the year 2020/21 
Key features 
  • The total amount of government-funded relief available for each property for 2020/21 under this scheme is 100% of the bill
  • NB the relief is not considered to be state aid
  • Local authorities are advised to apply this relief to eligible properties so no action is required of you. Local authorities may have to reissue your bill to provide this support, we understand this is underway

Protection from eviction
 Eligibility
  • Commercial tenants in England, Wales and Northern Ireland
  • Who cannot pay their rent because of Covid-19 
Key features
  • Businesses will not automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June 2020
  • The Government may extend this period if needed
  • All commercial tenants will still be liable for the rent – it is not a rental holiday.
 If you would like to discuss accessing and implementing any of these or other Covid-19 related measures, please do get in touch with our team. 
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