Government announced various financial measures in order to support small & medium enterprises and to reduce the impact of Coronavirus outbreak. In this blog, we will read about various financial measures announced by UK government along with their eligibility criteria in order to support start-ups, small and medium enterprises by providing them cash grants with affordable interest rates to retain them in this difficult time of Coronavirus outbreak. Now days, small businesses are suffering from cash flow problems and in order to boost them, UK government providing the following financial measures to small businesses –

Coronavirus Business Interruption Loan Scheme (CBILS)

Coronavirus business interruption loan scheme is a scheme announced by UK government to provide financial support to small & medium sized enterprises that are facing cash flow problems and are adversely affected by Coronavirus outbreak.

Who is eligible for CBILS Scheme?

You can apply for this scheme –
  • If you are having a UK based business
  • If you are having a turnover of less than £45 million
  • If your business is adversely affected by Coronavirus

What the CBILS Scheme includes?

  • Coronavirus business interruption loan scheme provides loans to SME’s between £1000 - £5million
  • Several business financing services are provided by UK government including –
    • Term loans (Tenure up to 6 years)
    • Overdraft (Tenure up to 3 years)
    • Invoice finance (Tenure up to 3 years)
    • Asset finance (Tenure up to 6 years)
These loans are offered by many of the approved finance providers or lenders on 80% guarantee provided by the UK government. Even interest and fees for the first 12 months will be paid by UK government. This helps in removing the cash flow problems of the small businesses.

Bounce Back Loan Scheme

Bounce back loan scheme is a loan scheme designed by UK government to provide financial support to those small and medium sized businesses that are adversely affected by COVID-19. In this scheme, all eligible small & medium sized businesses can borrow a loan between £2000 and up to 25% of their turnover. However, maximum amount of loan to be allotted in this scheme will be £50000. In this bounce back loan scheme, 100% guarantee is provided by the government to the lender and you don’t have to pay any fees or interest for first 12 months. You need to pay an affordable 2.5% interest annually after the completion of 12 months period.

Who can apply for Bounce Back Loan Scheme?

You can apply for this loan scheme –
  • If your company is UK based
  • If your company was incorporated before 1st march 2020
  • If your business is negatively impacted by coronavirus outbreak.
  • If your company is not in liquidation, bankruptcy or undergoing debt restructuring
Note – You can’t avail the bounce back scheme in case your company is already funded from Coronavirus business interruption loan scheme but in case you have already funded, you are having the option to transfer your loan to bounce back loan scheme. You can do this until 4th November 2020 only.

Future Fund Scheme

Future fund scheme is a loan scheme designed by UK government to help high growth businesses by providing them financial support for smooth functioning of their business. As per this scheme, loans are issued between £125000 to £5 million to those eligible businesses who are having inadequate funds and facing difficulties due to coronavirus outbreak.

Who can apply for Future Fund Scheme?

You can apply for this scheme –
  • If you are a UK unlisted registered company
  • If you have raised at least £250000 in the last 5 years through equity investment from third party investors
  • This fund can be availed till the end of September 2020

Self-Employment Income Support Scheme (SEISS)

Self-employment income support scheme is a scheme designed for granting payments up to £7500 to self employed persons. Currently, the tenure for this scheme is 3 months (£2500 per month) which may go beyond that as per the circumstances. It is similar to the scheme offered to full time employees.

Who can apply for SEISS Scheme?

You can apply for this scheme –
  • If you are self-employed person or a member of partnership
  • If you are having a taxable profit of less than £50000
  • If you are active in your self-employed business or partnership and continue to remain till 2020-21 tax year
  • HMRC may also contact you in case you are eligible for this scheme.
In order to determine your eligibility, government will calculate average of your taxable profits from 2016-17 tax year to the current year. You cannot claim the grant if you were a self employed person few months back but no longer active as a business concern. You need to apply for SEISS, if you are eligible for this scheme. You can use HMRC’s online tool in order to know your eligibility for SEISS grant. What it means for your business?
  • How much amount you are eligible for depends upon the average of your taxable profits as mentioned in your self-assessment tax return.
  • The maximum amount you can claim under this scheme is £2500.
  • This scheme is running from 13th May 2020.
  • You can only get this amount if you are adversely affected by Coronavirus.

Salary Payments for Workers in Businesses affected By Coronavirus

The new financial measure taken by UK government is introduction of Coronavirus job retention scheme to safeguard the jobs of workers. If your business is giving staff absence leaves due to coronavirus (known as furlough), then UK government will provide you reimbursement up to 80% of their wage costs for maximum amount of £2500 per month for maximum 3 months. This scheme is available until the end of October 2020 and it may extend further depending upon COVID-19 situation. The main purpose of this scheme is worker’s retention or to save staff from laying off. As per this scheme, you still need to pay the employees salary and you can reclaim it back from the government. You must designate your employee as furlough worker before applying for this benefit. You need to use HMRC’s online portal in order to make a claim. Make sure that the employees you have notified as furlough workers should not work for you in the furlough periodand must be sent to home. What this means for your business? This scheme is very useful for both businesses and their employees. Some businesses also using furlough in order to reduce their capacity and to maintain social distance.

Statutory Sick Pay

Statutory sick pay is the pay offered to sick employees during the time of coronavirus from the period ranging from 1 to 4 days. It covers the period of self-isolation too. In case you are suffering from the infection of coronavirus or self isolating yourself because of having similar symptoms to coronavirus in you or in your family, you will be offered up to 2 weeks of statutory sick pay by your employer. Employer an easily claim SSP from the government after paying the same to their employees. Employer can easily apply for the claim online from 26th May 2020. This rule is only applicable on those small & medium sized UK businesses who are having less than 250 employees. Employer need to keep a record of furlough workers in the absence of staff & employees need not provide GP fit note for the employer in order to claim SSP rebate. What this means for your business? There might be some cash flow issues faced by employer after giving SSP to employees as it helps in protecting your workforce from Coronavirus. However, employer can managethe cash flow issue by availing various other financial measures too.

Extra time to file accounts to Companies House

As per this measure, Companies house providing extra time tothe businesses in order to file their accounts if they are unable to file within time due to coronavirus outbreak. If your business is adversely affected by the coronavirusand you are unable to file your accounts to companies house, put a request of 3 months extension to your filing deadline to companies house. Fill an application form and make sure to include the following details mentioned below –
  • Company number
  • Extension reason
  • E-mail address
  • Documents to support your application (Optional)
What this means for your business? In case your business is adversely affected by Coronavirus and due to that you are failed to file your accounts to companies house before the deadline, apply for extra time or extend your deadline. In case you failed to apply for time extension, you will be automatically penalised for the same. In case companies house already extended your deadline once, further extra time will not be alloted to your business.

Cash Grants for Small Businesses

Cash grant of £10000 can be offered to 700000 small businesses operating in UK. Previously, Chancellor sets the cash grant at £3000 which is later rises to £10000 due to increase in coronavirus cases. Receiving of cash grants depends upon your business location in UK. What this means for your business? Cash grants proved to be a big boost for those small businesses who are adversely affected by Coronavirus and facing diffculties as they are not having enough cash in their hands. Cash grants are already issued to various small businesses by local authorities in April 2020 in England. It is currently being issued in northern ireland. Conclusion There are various financial measures offered by UK government to provide financial support to small businesses in this difficult time of Coronavirus outbreak. If you are facing financial difficulties or not having enough cash in your hands to carry on business operations, it is recommended that you must avail one of these financial measures depending upon your eligibility to fight the impact caused by Coronavirus and retain your presence by giving boost to it.