UK Government
Business Interruption Loan Scheme
On 17 March 2020, the UK Chancellor, Rishi Sunak MP, announced a government–backed guaranteed loan scheme worth £330bn. Designed for businesses that need cash to pay rent, suppliers, salaries or purchase stock, the scheme has been confirmed to be interest free for 12 months (as opposed to the original 6 months announcement).
On 2 April 2020, the chancellor extended this scheme it to all viable small and medium businesses that have faced financial difficulty during the pandemic, by allowing companies to apply without necessarily having first attempted to get a commercial loan elsewhere. Banks have also been banned from asking company owners to personally guarantee loans when borrowing up to £250,000.
Coronavirus Large Business Interruption Loan Scheme
On 2 April 2020, the chancellor also announced a scheme for larger companies: businesses with an annual turnover of between £45m and £500m can access loans of up to £25m. This scheme will be delivered through commercial lenders, backed by the British Business Bank. The government will provide lenders with an 80% guarantee to give lenders the confidence to lend to many more businesses which are impacted by coronavirus. It should be noted that these loans are not interest free.
Coronavirus Job Retention Scheme
This scheme, announced on 20 March 2020, is open to any employer in the country. It will see for the first time ever the UK government pay up to 80% of the salary of all workers at risk of being laid off due to the coronavirus. Employers need to apply to HMRC for grants of up to £2,500 per month to cover the salary of workers kept on by their company. Read more here.
Coronavirus Self-employment Income Support Scheme
The much awaited assistance package for the self-employed and freelancers was announced on 26 March 2020, after these workers were initially instructed to claim universal credit at a rate equivalent to statutory sick pay. The scheme represents a taxable grant which will be paid as sum worth 80% of their average monthly income up to a cap of £2,500 per month for 3 months (this will be calculated taking the average income over the last 3 years). Read more here.
Other measures
- the extension of business rates holiday to all businesses in the hospitality sector (irrespective of their rateable value) for 12 months
- funding grants of between £10,000 and £25,000 for small businesses
- a new lending facility for larger businesses, to be set up by the Bank of England
- an obligation for insurers to pay out to companies covered for pandemics
- a potential support package specifically for airlines and airports
- a three-month mortgage holiday for those in financial difficulty due to coronavirus
- deferring the next quarter of VAT payments, which is the equivalent of a further £30 billion injection into the economy
- Covid Corporate Financing Facility: large companies can access loans for up to 12 months from the Bank of England to relieve cash flow pressures
Welsh Government
The chancellor initially announced £1.5bn to help the devolved administrations respond to the pandemic. Since then, the Welsh Government has further detailed the content of its support packages.
£200m support package for small businesses
On 16 March 2020, the Welsh Government said it would offer 100% business rates relief to shops, leisure and hospitality businesses with a rateable value of £51,000 or less. Businesses with a rateable value of between £51,000 and £100,000 will receive a £5,000 reduction on their bill. This measure is complemented by a further £100m for a new grant scheme for small businesses.
The Development Bank of Wales also made loan and equity funding available immediately, and said it will provide a three-month capital repayment holiday to the businesses it supports.
Additional £1.4bn business support package
To match the measures in England, the Welsh Government then announced on 18 March 2020:
- a year–long business rates holiday for retail, leisure and hospitality businesses in Wales
- a grant of £25,000 for businesses in the same sector with a rateable value of between £12,001 and £51,000
- a £10,000 grant to all businesses eligible for Small Business Rates Relief with a rateable value of £12,000 or less
£1.1bn support package for the economy and public services
The package, announced on 30 March 2020 as reprioritised money, consists of cash reallocated from existing budgets and new money from the UK Treasury. It consists of several schemes will be announced throughout the week.
So far, we know that £500m will go to an economy crisis fund for businesses, charities and social enterprises to help them to survive the crisis so that they can provide jobs and products in the future. This fund is made up of two parts:
1. Business Loan Scheme (£100m)
This fund is to be administered by the Development Bank of Wales. Companies experiencing cashflow problems as a result of COVID-19 will be able to apply for loans of between £5000 and £250,000 at favourable interest rates. This will operate alongside the other UK wide loan schemes and Government Support measures set out in this guide.
2. Economic Resilience Fund(£400m)
This emergency pot will support business who have gone into ‘hibernation’ ceased trading or who need financial support to adapt to remote working. It provides:
- from Mid-April micro-businesses employing up to nine people, including sole traders employing staff, will be able to apply for grants of £10,000
- small to medium sized firms with between 10 and 249 employees can receive grants of up to £100,000, and eligible businesses can apply from next week
- larger Welsh businesses will also be supported however details on what support they will receive has not been announced. This element will be open within two weeks
The Welsh Government is working in partnership with local authorities to deliver the grants to qualifying businesses, for more information click here.
Banks
The banking industry has also promised increased support for businesses. Here are a few examples, although of course, any offerings are to be assessed on a case by case basis.
Lloyd’s banking group has announced it will support small businesses affected by COVID-19, setting aside £2bn which it will use to provide arrangement fee free finance to businesses with up to £25m turnover.
Similarly, Barclays has announced it would be able to offer 12-month repayment holidays on loans over £25,000 and shall offer lending support to businesses via new or extended overdraft facilities.
Natwest has committed an additional £5bn to support businesses with working capital finance, loan repayment holidays for borrowers with cash flow issues caused by the outbreak and temporary fee free emergency loans.
What does this mean for your business?
Several support websites have been set up for further information about any government grants that may be awarded in the coming weeks and months to businesses across the UK, in:
We will be updating our communications as and when the governments release more details. We want to work with you during this time to help you as best we can, so please get in touch in you have any questions or concerns.
