The COVID-19 pandemic and its resulting shutdown of the economy has caught many UK businesses unprepared. A survey done by the UK Office of National Statistics (ONS) showed that 44% of businesses do not have enough cash reserves for the next six months, while another survey done by the British Chamber of Commerce reports that up to 71% of businesses have furloughed staff.
If you manage a business, you’re probably in the difficult situation of trying to keep your cash flow positive while managing a variety of new risks — so the thought of ‘what happens to the business after coronavirus’ might not be on your mind right now. However, planning for your business’ post-crisis recovery is important to ensure its survival after the pandemic ends.
The UK Government has put in place several forms of financial and non-financial aid that you can make use of in your post-COVID19 planning for your business. Here are some of the main ones:
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (CJRS) offers a grant for furloughed staff that covers 80% of their salary, which is capped at £2,500 per month. The HMRC portal, which is used to apply for the scheme, went live April 20, 2020, and will remain active until the end of October 2020. The CJRS is one of the most popular schemes for businesses — as of May 3, 76% of businesses the ONS surveyed have applied for the scheme.
Besides wage-earning staff, limited company directors and salaried members of limited liability partnerships may also be eligible for the CJRS for the part of the income that they pay themselves as a salary via PAYE. New flexibility measures will be introduced from August onwards to get employees back to work and boost the economy.
Coronavirus Business Interruption Loans
If you run a small or medium-sized business in the UK, the Coronavirus Business Interruption Loan Scheme (CBILS) can help you access loans and other kinds of finance, up to the amount of £5 million. The government will guarantee 80% of the finance to the lender and will pay the interest and any fees on the loan for the first 12 months.
To qualify for the CBILS, your business needs to have an annual turnover of up to £45 million (before the pandemic), and you need documentation to show that your business has been adversely affected by the coronavirus. If you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on December 31, 2019.
Coronavirus Bounce Back Loans
Another loan option for small and medium-sized businesses who need to access finance more quickly is the Bounce Back Loan Scheme (BBLS), which allows you to borrow between £2,000 and up to 25% of your turnover. The maximum loan amount available to borrow is £50,000.
Under the BBLS, the UK government guarantees 100% of your loan and you will not have to pay any fees or interest rates for the first 12 months upon loan approval. After the first 12 months are up, the interest rate will be 2.5% a year.
Coronavirus Large Business Interruption Loan
If you run a larger business that doesn’t qualify for the CBILS or the BBLS, you can apply for the Coronavirus Large Business Interruption Loan Scheme (CLBILS). This scheme will grant you access to loans and other kinds of finance, up to an amount of £200 million. The government will guarantee 80% of the finance to the lender.
To qualify for this scheme, you need to have a turnover of over £45 million (pre-pandemic) and have not received support under the Bank of England’s COVID-19 Corporate Financing Facility. If you’re borrowing more than £50 million, you may be subject to restrictions on dividend payments, senior pay and share buy-back throughout the loan duration.
VAT payment deferral
If your business is VAT-registered, you most likely pay your business taxes twice a year: the first payment on your account, which was due on January 31, accounts for any tax you owe for the previous tax year while the second payment, due July 31, is for the rest of the taxes.
The VAT deferral scheme gives you the option to defer your second VAT payments that are originally due between March 20, 2020 to June 30, 2020. The HMRC will not charge you any interest or penalties on the amount deferred, as long as you pay the full amount before January 31, 2021.
Claim back statutory sick pay
Coronavirus concerns might rightly drive your staff to seek treatment if they have symptoms — and you can claim back the sick pay paid for these instances from the UK Government via the Coronavirus Statutory Sick Pay Rebate Scheme.
You can use the scheme as an employer if:
you’re claiming for an employee who’s eligible for sick pay due to coronavirus
you have a PAYE payroll scheme that was created and started on or before February 28, 2020, and
you had fewer than 250 employees on 28 February 2020 across all your PAYE payroll schemes.
You can claim back from both the Coronavirus Job Retention Scheme and the Coronavirus Statutory Sick Pay Rebate Scheme for the same employee, but not for the same period. Employees also do not have to give you a doctor’s fit note for you to make a claim.
As a business planning to survive during and after the COVID-19 pandemic, it’s good to use all the tools that you have at your disposal — and government aid is one of many options that you can use to safeguard your cash flow, keep your staff, and minimize fallen turnover this year.
For more detailed, full-picture strategies on how you can reopen your business post-COVID19, check out our extensive post-COVID19 recovery tool.