On a daily basis the updates on Coronavirus are coming fast. It is clear that the initial measures announced by the government are insufficient and they are now discussing how to ensure mass redundancies do not happen.

Many businesses say they are teetering on the brink as revenues plunge following the stay at home advice and customers holding back payments as their cash dries up.

Emergency funding of £330 billion will be put aside from the Government’s financial support package for businesses of all sizes in a bid to help those impacted by Coronavirus.

Rishi Sunak has vowed to do “whatever it takes” to help the economy with an “unprecedented package” including Government-backed loans equivalent to 15 per cent of GDP, with the potential to be extended further depending on the demand.

What’s Included in COVID-19 Emergency Funding?

• Government backed loans with attractive terms for payment of rent, salaries, suppliers or stock.
• For businesses in the retail, hospitality and leisure industries, rates will be waived for 12 months for 2020/21. The definition of such companies is yet to be finalised
• The Coronavirus Business Interruption Loan Scheme expanded from £1.2m to £5m with an interest waiver for the first 6 months. The details of this are yet to be released, but the businesses need to be previously viable and a detailed long business plan will not be required. However, it is not clear if a personal guarantee will be required. In our opinion, the government will need to forego any personal guarantees to make this work.
• Grants to small businesses eligible for Small Business Rate Relief will be increased from £3,000 to £10,000.
• Further £25,000 grants for retail, hospitality and leisure businesses operating from smaller business premises, defined as those within a rateable value between £15,000 and £51,000.
• £10,000 one-off grant to businesses that pay little or no business rates due to small business rent relief or rural rate relief.
• Small and medium sized business will be able to reclaim SSP for sickness due to COVID-19.
• Support for liquidity for larger business with a new scheme from the Bank of England.
• Pubs and restaurants are able to provide a takeaway service without a planning application.
• HMRC time to pay scheme.

Full details of how these initiatives will work are due for release early next week. Further initiatives are also expected in the next few days focused on employment related issues.

Recommendation

• Bring your accounts up to date and prepare forecasts for both the disruption period and thereafter so you can understand your cash flow and what steps you need to take.
• Subject to the terms of the business interruption loan scheme and suitability, apply for the loan utilising those forecasts, we can help and advise.
• Consider short term assistance from HMRC in the form of time to pay agreements in order to preserve cash until the Chancellor reveals the details of the proposed assistance.

If you need any help just ring me on 07813-915038 or email [email protected]. We will also be able to help with applying for business interruption loans.

Regards

John O’Mahony BSc ACA

S4B