Accessing the Government’s COVID-19 business support funding

Published on:
March 19, 2020

At Budget 2020 last week, the UK Chancellor announced a set of temporary measures designed to alleviate pressure on businesses caused by the COVID-19 outbreak. This Note summarises what these measures are, which businesses are eligible for support, and how applications can be made.

Statutory Sick Pay Relief

The Statutory Sick Pay (SSP) relief will enable businesses to reclaim SSP paid to their employees that are absent due to COVID-19.

Eligibility criteria

  • Businesses must have fewer than 250 employees as of 28 February;
  • The cost of up to 14 days of SSP per SSP-eligible employee can be reclaimed, starting with day 1 of absence instead of the standard day 4;
  • Eligibility period: from 13 March onwards;
  • SSP-eligible employees: those who tested positive; and who follow government advice to self-isolate at home and cannot work as a result (even without symptoms). No GP fit note will be required from employees. Employers should, therefore, maintain clear records of staff absences.

Application process

  • No repayment mechanism is currently set up by the government;
  • Caution: this will likely not solve short-term cash flow problems, as the government warned that it may take months to process reimbursements.

Business Rates Relief

This measure will offer businesses in England a business rates retail holiday for the 2020-2021 tax year.

Eligibility criteria

  • Businesses of any size (no rateable value threshold);
  • Must operate in the retail, hospitality or leisure sectors;
  • Currently paying business rates to their local authority.

Application process

  • Relief-related applications must be directed to businesses’ local authorities;
  • Local authorities are expected to publish guidance when it is first issued to them by the Ministry of Housing, Communities and Local Government on 20 March.

Furthermore, businesses operating from smaller premises (with a rateable value between £15,000 and £51,000) will be eligible for a larger grant of £25,000.

Grants for small businesses

Small businesses which already pay little or no business rates will receive a further £10,000 grant to help them cope with operating costs.

Eligibility criteria

  • Businesses must currently be eligible for the small business rate relief (‘SBBR’) or rural rate relief.

Application process

  • No application necessary: local authorities will be contacting businesses themselves;
  • Businesses should nevertheless be proactive by establishing contact with their local authorities as soon as possible and staying up to date with government updates;
  • Guidance is expected to be issued by the Business Secretary to local authorities by 20 March;
  • Funding will only become available in early April.

Coronavirus Business Interruption Loan Scheme (‘CBILS’)

Businesses will be able to access government-backed loans, overdrafts and other products from accredited lenders through the new CBILS from week commencing 23 March onwards. The government will thereby encourage lenders to finance businesses which would ordinarily meet their requirements but have insufficient security and are therefore too risky. The government will therefore:

  • Provide a guarantee of 80% of each loan to the lender (note that the borrowing business always remains 100% liable for the debt);
  • Waive the 2% interest it usually charges for guaranteeing loans;
  • Cover the first 6 months of interest payments.

Eligibility criteria

  • Businesses must be UK based;
  • Have yearly turnover of up to £41 million per annum;
  • Operate within an eligible industrial sector;
  • Have a sound business proposal, but insufficient security to meet normal requirements (Note: proposals to lenders should clearly show how it is COVID-19 – not broader underperformance – that led to the request of the loan);
  • Request a loan of between £1000 to £5 million;
  • Be able to confirm that it has not received de minimis State Aid beyond €200,000 equivalent over the past 3 years;
  • Further eligibility details will be published this and next week.

Application process

  • The CBILS will be available from 23 March.
  • As loans are provided by banks, applications are similar to – and should take no longer than – businesses’ standard dealings with their banks.
  • Businesses should approach any lender participating in the scheme to discuss their borrowing needs.
  • If a lender would ordinarily finance without the need to rely on CBILS, it will do so. Where, however, the business has insufficient security, the lender will consider support via CBILS.
  • Further application details will be published this and next week.

Note that businesses with a turnover higher than £41 million should instead access funding from the Bank of England’s new COVID-19 Corporate Financing Facility offering the purchase of short-term debt. Further details will be available from the week commencing 23 March.

HMRC's tax suspension

Businesses facing cash flow problems and outstanding tax liabilities may negotiate a ‘time to pay’ agreement with HMRC, which could:

  • Suspend debt collection proceedings;
  • Defer tax payments and waive the usual 3.5% annual interest;
  • Establish instalment arrangements.

Eligibility criteria

  • All businesses and self-employed people that pay tax to HMRC.

Application process

  • As each agreement is negotiated individually, businesses should contact HMRC’s dedicated hotline as soon as possible;
  • Businesses should reach such agreements with HMRC in advance of any payment deadlines.

Overall, for the time being a lot of the details, eligibility and application requirements are still in the process of being defined. Businesses seeking to access any of the above options should, therefore, (1) be as proactive in preparing for the above as possible, (2) get any relevant legal advice and (3) stay up to date with updates from the government and the Business Support Helpline.


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