The UK Government has announced of a package of support aimed at helping businesses through the current period of disruption. Here, Harper Macleod's Head of Banking, Tony Cameron, and Restructuring specialist Gordon Hollerin look at what this might mean for businesses, particularly in terms of accessing additional funding.
The key measures include:
- statutory sick pay relief package for SMEs
- 12-month business rates holiday for all retail, hospitality and leisure businesses in England
- small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance
- HMRC Time To Pay Scheme
What does it mean in practice?
Full details of the package and the available information about eligibility for each measure can be found on the Government website.
How it will all work in practice is not absolutely clear cut at this stage, however for businesses there are important aspects of the overall package and what lies behind it.
Clearly the hospitality, leisure and retail sectors have been singled out for assistance. The business rates measure has still to be outlined in Scotland, as the Chancellor's announcement related to England, but a similar move is to be expected.
At Harper Macleod we have ensured that we are available to deliver services uninterrupted and our specialists are on hand as you try to come to terms with the impact of COVID-19.
We are here to help.
Coronavirus Business Interruption Loan Scheme
One of the key measures is support for businesses through the Coronavirus Business Interruption Loan Scheme.
According to the Government, the temporary scheme is to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the scheme will support loans of up to £5 million in value. Businesses can access the first six months of that finance interest free, as government will cover the first 6 months of interest payments.
Effectively, the Government will be acting as a guarantor to encourage the banks to lend money to businesses in the short term. This allows that borrowing to take place a low interest rate, even at a time when the risk to a business' survival is high.
The idea is that this money can help see businesses through to the post-Covid-19 period – albeit with debts from this period to deal with which may require refinancing at a later date.
Any business taking on any such additional debt should seek specialist advice on the precise terms of that funding so that it fully understands the current and future implications for the business in so doing. How this fits with any other existing sources of funding that the business has will also be important.
Directors will also need to consider carefully their duties in relation to wrongful trading and whether they may open themselves up to personal liability by taking a loan on in circumstances where the business may already have been unviable, notwithstanding the crisis.
Our specialists are here to help businesses with the advice they need in considering the Coronavirus Business Interruption Loan Scheme as a means of supporting their business at this time.
Support for businesses paying tax
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
Get in touch
If you've any queries about the above issues, or any related matter that could affect your business, our team of specialists can assist. Please contact us to discuss further.