Financial Support to mitigate the effects of Coronavirus

Published 17 marzo 2020

Updated 19 March 2020

The Government has put in place further measures to deal with the financial impact of COVID-19.

1. Small and medium sized businesses 

The level of borrowing guarantees for SMEs has been increased to £5 million. In addition there will be an interest “holiday” for the first six months of any loan a business takes out as a result of the impact of the Coronavirus. Loans can be provided by any accredited lender which includes most banks.

2. Large firms

Whilst not normally eligible for assistance, the Bank of England will launch a major new scheme (probably on Monday 23rd March) to provide bridging loans to large businesses whose cash flow may be impacted by Coronavirus. The scheme will be directly administered by the Bank of England.

3. Retail and leisure 

The sector which has seen the first impact of the Coronavirus will be eligible for grants of up to £25,000 in addition to rate relief and access to the Coronavirus Business Interruption Loan Scheme. The grants will be administered by Local Authorities.

4. Mortgage holidays

A number of Banks have announced mortgage holidays of up to three months for any individual who is made redundant or temporarily laid off as a result of the impact of Coronavirus.

5. Tax relief

The proposed redrafting of the IR35 tax relief has been postponed for a year. It should also be note that whilst these initiatives (with the exception of sick pay) are very similar to initiatives instigated in 2008, it is possible that Government may introduce other similar initiatives such as Transitional Loan Funds and/or grant schemes.

6. EU measures 

The EU Commission has issued a Temporary Framework for small amounts of compatible aid meaning that, subject to some light touch due diligence, governments (including the UK) can give grants of up to €500,000 to businesses in difficulty which is very similar to the scheme introduced during the financial crisis. The EU Commission has also released £140 million for research on vaccines, diagnosis and treatment.

7. Support for community charities 

It is anticipated that the Nations Emergencies Trust will be launching an appeal imminently to raise funds to support local charities affected by Coronavirus and that the fund will be administered by Community Foundations. A number of Community Foundations have already launched funds e.g. https://www.communityfounation.org.uk/coronavirusfund.

Published 17 March 2020

Please find a summary of measures that the Government currently has in place to deal with the financial impact of COVID-19. Announced on 11 March, they are very similar to measures put in place to tackle the financial crisis of 2008.

1. Cash flow

Recognising that businesses may face a strain on cash flow in the coming months the Enterprise Finance Guarantee Scheme administered by the British Business Bank has been renamed the Coronavirus Business Interruption Loan Scheme, which is a guarantee scheme for loans taken out by businesses. Essentially a business can borrow up to £1.2 million and the scheme will guarantee an 80% repayment to any accredited lender (a list of accredited lenders can be found here). There will be no charge for administering the scheme, although businesses, whilst solvent, remain liable for the full amount of the borrowing.

2. Tax

HMRC has altered the "time to pay" tax suspension scheme, which is an agreement to suspend tax collection, and waived the usual 3.5 per cent annual interest on deferred tax payments. There is a dedicated hotline for businesses and self-employed to use which is 0800 0159 559. Further information can be found at here. 

It is vital that businesses get prior agreement with HM Customs & Revenue before suspending payment of tax.

3. Rates

Retail, leisure and hospitality companies with a rateable value of less than £51,000 will not pay any business rates this year. Additionally firms in England will not pay business rates on approximately 45% of properties; it is anticipated that the Devolved Nations will follow this initiative. It is important that businesses recognise this scheme has been implemented by Government but the collection of business rates is administered locally (usually by Local Authorities) so it will be important to work with your rates collector to ensure you are eligible for this relief.

4. Grants

There are 700,000 small businesses eligible for either Small Business Rate Relief or Rural Rate Relief who can now apply for a grant of up to £3,000 to mitigate the effects of Coronavirus. The money will be made available to Local Authorities although it is not yet clear how the scheme will be administered. At present the scheme only applies in England, although it is expected that the Devolved Nations will follow suit.

5. Sick Pay

Small and Medium sized Enterprises (SMEs) will be able to reclaim the cost of 14 days sick pay per employee which will amount to nearly £200 per employee. As the definition of SME extends to any business employment 249 employees or less, this could amount to relatively substantial claims. However, at present, there is no repayment mechanism in place so it could be weeks or even months before the scheme can be accessed.

It should also be note that whilst these initiatives (with the exception of sick pay) are very similar to initiatives instigated in 2008, it is possible that Government may introduce other similar initiatives such as Transitional Loan Funds and/or grant schemes.