March 19th, 2020. Luke Egan
How is the Government Helping Businesses Affected by Coronavirus?
With coronavirus a worldwide issue and the government encouraging everyone to social distance wherever possible, many organisations are closing their doors and thousands of businesses are worrying about what this means for their bottom line.
Without foot traffic many businesses will struggle to survive, and politicians are now recognising this. However, there is some confusion over what financial support is available and who is eligible.
We’re here to help. Here is what we know so far about the support available and how the industry is acting to minimise negative impact:
(Please note: This piece will be updated as and when new government announcements are released)
The Chancellor’s Announcement
Chancellor Rishi Sunak has announced £330bn – 15% of the UK’s GDP – will be given out to protect businesses affected by the pandemic and to avoid an economic emergency. He said:
“Any business who needs access to cash to pay their rent, the salaries, suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms.
“And if demand is greater than the initial £330billion I’m making available today, I will go further and provide as much capacity as required. I said whatever it takes – and I meant it.”
So, how will this money be spent?
Ensuring Lending Continues with Minimal Interruption
The Coronavirus Business Interruption Loan Scheme (CBILS) is temporary action, delivered by the British Business Bank, launching on 23rd March 2020. This will provide access to bank lending and overdrafts for businesses, supporting loans of up to £5m. This aims to support those applying for new facilities, as well as lenders providing them, during the Covid-19 outbreak.
To ensure funding continues, the government will guarantee lenders 80% on the facility balance of each loan. It is hoped this will boost lenders’ confidence and ensure more ‘no’ responses become ‘yes’.
Neither businesses or banks will be charged for this security, but the borrower will always remain liable for 100% of the debt.
For the first six months, businesses can access this finance interest free. Instead, the government will cover these costs. Terms will be from three months up to ten years, depending on the type of finance sought.
To be eligible for CBILS support your business must:
- Be UK-based.
- Have a turnover of less than £41m per annum.
- Operate within an eligible industrial sector (A full list of restrictions can be found here).
- Have not received de minimis State aid beyond €200,00 (or equivalent) during the current or previous two fiscal years.
- Have a sound borrowing proposal.
To apply, you should approach one of the 40+ participating lenders and partners with a borrowing proposal. If they can offer funds without the use of CBILS, this will be offered first.
Our Co-Founder and Managing Director, Ben Lloyd, said:
“Most financial institutions will have business continuity plans in place to adapt to situations like this. However, money is not limitless, so the extent of the virus’ effects and how long isolation continues will play a huge part in lending over the next few weeks and months.
“With government support, disruption will be minimised, but I still expect there to be an influence on rates and a rise in people looking to refinance.
“Myself, and the team here at Pure, will be keeping a close eye on developments.”
Other Forms of Support for Businesses and Homeowners
Statutory Sick Pay Relief
Small and medium sized businesses can soon reclaim Statutory Sick Pay (SSP) paid out due to Covid-19. This will cover up to 2 weeks’ SSP per eligible employee for employers with fewer than 250 employees.
No fit note will be required to evidence this sickness, but detailed notes are encouraged.
Business Rates Relief
A 12-month relief on business rates for all retail, hospitality and leisure businesses in England.
Any businesses that have received the retail discount for 2019 to 2020 will be rebilled ASAP.
Guidance on eligibility will be released by your local authority on March 20th.
Small Business Grant Funding
All businesses in receipt of small business rate relief (SBRR) or rural rate relief will be able to apply for a grant of £10,000 to help with their ongoing business costs.
You do not need to apply for this. If you’re eligible, you will be contacted by your local authority. Government funding will be passed to local authorities in early April.
Grant Funding for Retail, Hospitality and Leisure Businesses
Grant funding of up to £25,000 will be available for businesses in these sectors which have property with a rateable value between £15,000 and £51,000.
HMRC Time to Pay Scheme
If you are a business or self-employed person who can be considered as ‘under finance distress’ and have outstanding tax liabilities, you may be eligible for support under HMRC’s Time to Pay Service.
Eligibility for this scheme is assessed on a case-by-case basis. So, if you’re concerned about paying your tax due to Covid-19, ring HMRC’s dedicated helpline on 0800 0159 559.
Help for Homeowners and Tenants
Whether you’re a homeowner, tenant or landlord, mortgages and rent are likely on your mind at the moment. Well, in addition to all of the above business support, the government has revealed a three-month mortgage holiday for homeowners who will struggle to make repayments due to the effects of coronavirus.
If you’re in this situation, you are encouraged to contact your lender.
So far, there is no news on help for renters. However, we expect updates on this soon. Boris Johnson has already alluded to some protections against eviction if missed payments were due to the virus.
Business as Usual Here at Pure Commercial Finance
Here at Pure Commercial Finance, many of our team are working from home. However, we’re working hard to minimise disruption and, so far, business continues as normal.
With that in mind, if you require commercial funding for your property project, we can help. Please get in touch to discuss your deal today.
If you would like further information on any of the schemes mentioned above, please visit gov.uk.
Article By Luke Egan
March 19th, 2020
Luke heads up our specialist property finance team where his focus is to drive our transactions valued between £100k and £5m.
Luke and his team manage enquiries from initial enquiry through to redemption. Luke also sits on the internal credit committee with Ben and Tom.
Luke joined Pure back in 2014 following a successful role in the Barclays property finance team that lasted over 8 years.See more articles by Luke