ARCA COVID 19 update - Government and financial support

What direct financial support will be available from Government for companies managing the impact of coronavirus?

The Government, financial regulators and financial services businesses are working hard, at top speed, to get these schemes up and running as soon as possible, with the government currently suggesting that they will be available by the end of March. It is taking time so that these schemes launch well, with banks working now to train up their staff and Relationship Managers so companies get the right advice first time, without mistakes

• The Government has announced a coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to allow small businesses to apply for a loan of up to £5m with no interest payable for the first 12 months. This will be coordinated with banks through the British Business Bank. It is anticipated this will be launched the week of 23 March. Updates are available on the BBB’s website   

• The Government has also announced a £10,000 cash grant for the country’s 700,000 smallest businesses. These will be distributed through Local Authorities to all businesses in receipt of Small Business Rates Relief and Rural Rates Relief. Details of those can be found here  and businesses should anticipate Local Authorities getting in touch with them regarding this in early April

• The Government has also announced that it is working with the Bank of England on a new lending facility for large businesses which will support businesses experiencing severe short-term disruption to cashflows. Companies that need £5m or more will be able to contact their existing bank to request commercial paper under the Bank of England scheme. Initially available for 12 months, the CCFF will provide funding to business by purchasing commercial paper of up to one-year maturity, issued by companies that make a material contribution to economic activity in the UK. This will cover UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK. This scheme is open now and applications can begin being made at applications@bankofengland.co.uk. More information on this scheme can be found here.  

• The Chancellor announced the Coronavirus Job Retention Scheme, which will be accessible for all businesses. The government will pay up to 80% of furlough workers’ salary (up to £2,500 per month) This is a grant and the first grants will be paid within weeks; it should all be up and running before the end of April. The pay will be backdated to 1 March 2020, and the scheme will run for a maximum of 3 months and employees cannot work during that period.

• Q1 VAT payments will be deferred: there will be no payments between now and the end of June. Businesses will have until April 2021 to pay this back. Self-assessment payments are deferred until January 2021

What tax cuts or other tax measures will be available for companies?

• The Government has announced it will temporarily increase the Business Rates retail discount in England to 100% for the 12 months of 2020-21 for all retail properties, and that those retail properties that have a rateable value of below £51,000 will be eligible for a grant of up to £25,000

• The Government has also highlighted HMRC’s Time to Pay system which can help businesses facing short-term cash flow issues. Companies having to access this system can find government advice here.  A dedicated helpline has been launched so businesses in financial distress with outstanding tax liabilities can get help fast on 0800 015 9559

• Further advice is available from the governments dedicated Business Support website.  There is also a helpline if you are unable to find the advice you need on 0300 456 3565.

What support will be available from the private sector for companies managing the impact of coronavirus?

• Some banks have begun to make dedicated funds available for firms experiencing coronavirus-related hardship. For example, NatWest bank have announced £5bn of Working Capital Support for business that will see disruption. Lloyds Banking Group has announced £2bn of arrangement fee free finance available to support small businesses and Barclays have highlighted their 12-month capital repayment holidays and its £14bn SME lending fund

• Some insurers are not categorising coronavirus as an illness that is covered under business continuity insurance or business interruption insurance. It is highly recommended that firms check with their insurers what their policies will cover

• The CBI will provide further guidance and support for business managing coronavirus in the weeks and months ahead if its impact continues to increase

• Further advice on finance is available from UK Finance here 

• Further advice on avoiding coronavirus-related fraud is available from the Take Five campaign here.  

23 March 2020