A drop in productivity, and/or reduced demand could cause cash flow issues for many SMEs during the Coronavirus outbreak and beyond. Projections have always been a key tool for businesses and as the uncertainty surrounding Covid 19 and its economic effect continues, potentially never more so.
Planning and forecasting potential issues enable pro-active discussions with funders, and actions by Government, the central bank and funders are now available to assist businesses through financial challenges arising from the pandemic.
We have seen this week the implementation of the latest Government initiative, the ‘Bounce Back’ loan scheme, in addition to the two emergency interest rate cuts and other measures including Coronavirus Business Interruption Loans, refunds of up to 2 weeks’ statutory sick pay for firms with fewer than 250 staff and the abolition of business rates in certain sectors, all aimed at bolstering business support.
You can find a Government fact sheet supplying further information here.
I am an SME what funding options are available to me?
The Bounce Back Loan Scheme is available to small businesses providing easily accessible loans of between £2,000 and £50,000 at a flat interest rate of 2.5% backed by a 100% guarantee from the Government. For more information on key terms and how to apply visit the Government support page.
The Coronavirus Business Interruption Loan Scheme (CBILS) is now open for applications for businesses who would have been eligible for a loan prior to the pandemic. Its key features include;
- Up to £5m facility
- Up to a 6-year term for loans and asset finance and 3 years for overdrafts and invoice finance facilities
- No fee for SMEs to access
- 80% Lender guarantee
- Interest and fees paid by Government for 12 months
Further information regarding the key features, including security requirements and liabilities can be found on the CBILS website
What measures has the Government introduced which can help my cashflow?
The Government announced several changes to tax and rates collection, as well as the funding in part of Statutory Sick Pay. We have the keys facts for you below, but the full information can be found on the gov.uk website.
Deferral of tax payments
- VAT– there will be an automatic offer to defer VAT payments during the period 20 March to 30 June, with the taxpayer given until the end of the 2020/21 tax year to settle liabilities accumulated during the deferral period. Don’t forget to cancel your direct debit.
- Grants of £10,000 funding are available for small businesses that pay little or no business rates and who are eligible for Small Business Rate Relief (SBBR) or Rural Rate Relief. Qualifying businesses will be contacted by their Local Authority – they do not need to apply.
- All retail, hospitality and leisure businesses in England can receive a 100% business rates holiday for the next 12 months.
- Grants of £25,000 for retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000. Qualifying businesses will be contacted by their Local uthority – they do not need to apply.
Statutory sick pay
- For businesses with fewer than 250 employees, the cost of providing 14 days of statutory sick pay per employee will be refunded by the government in full.
How can Tozers help?