Coronavirus; What Financial Support is Available for Small Businesses and the Self Employed?

It’s literally the only thing being discussed at the moment, whether it’s online, in the news, or between people in the street.  Coronavirus, or COVID-19, is the topic, because it’s causing such widespread disruption and alarm.

While the supermarkets are doing very well out of the crisis, with people stock piling left, right and centre, and Facebook flooded with memes about toilet roll, other businesses are already feeling the pressure of steps being taken to delay the impact of the virus.

The Events industry has been immediately impacted, with many events in the coming months being postponed to much later in the year, or cancelled completely.  Any company remotely linked to travel is also impacted, from the larger airlines, to the small chauffeur and taxi companies.  And, the already struggling, are feeling the squeeze more than ever.

This post isn’t designed to jump on the bandwagon or add to the media frenzy.  The simple purpose of this post is to provide small businesses and the self employed with practical information for managing the financial impact on their business in the current climate.

Why are small businesses so important in the UK? 

Here’s some stats for you:

  • There are approximately 5.9 million small to medium businesses in the private sector in the UK during 2019 – this is over 99% of all businesses in the UK
  • 5.6 million of these businesses are micro businesses, with 0 to 9 employees – 96% of all businesses
  • These businesses account for 33% of UK employment and 22% of turnover
  • These businesses also account for 60% of all private sector employment

Government Measures

The government have already begun manoeuvring the playing pieces into place, to provide assistance to businesses large and small.  Here’s what they’ve announced so far:

  • The Budget 2020 Provided a Coronavirus Business Interruption Loan Scheme

Who from? A scheme delivered by the British Business Bank

What is it? Loans of up to £1.2m, with the government providing up to 80% of the funds to lenders if the loans are defaulted, and there are no fees

Why? This gives lenders more confidence in approving loans for small businesses who would normally have insufficient security to meet the lenders normal requirements

Who’s it for? Businesses with a turnover of less than £41 million

How does it help? It will unlock up to £1bn to protect and support small businesses

How to apply? This scheme will launch in the next few weeks, so how to apply hasn’t been circulated yet

A number of private lenders are also making funds available to small businesses impacted by the virus, including £2bn from Lloyds Banking Group and £5bn from NatWest.

  • 14 days statutory sick pay refund

Who from? The government

What is it? The government have pledged to pay the first 14 days of statutory sick pay that businesses shell out on staff with Coronavirus symptoms

Why? Because the government wants to encourage self isolation for those with Coronavirus symptoms they have amended the statutory sick pay rules so employees are entitled to it at day 1, instead of day 5

Who’s it for? Businesses with less than 250 employees

How does it help? It will ease the amount small businesses have to pay out for staff members who miss work due to symptoms and/or the virus

How to apply? Again, similar to the first measure, the government are yet to set up a claim/reimbursement procedure for this one, so it could be a while until businesses are refunded.  Good records will be important for claiming this one back.

  • Business rates reduction/discount

Who from? The government

What is it? The government are increasing the Business Rates retail discount to 100% for one year

Why? To ease the financial burden on small businesses

Who’s it for? Retail, leisure and hospitality sector businesses including hotels, restaurants and coffee shops

How does it help? For businesses in the retail, leisure and hospitality sectors with a rateable value of less than £51k they won’t have to pay any business rates.  The discount pubs receive increases from £1k to £5k, meaning pubs with a rateable value of less than £100k won’t have to pay any business rates this year

How to apply? Local councils are currently responsible for small business rates relief, this shouldn’t change as these measures just extend the originally relief

  • Small business grants

Who from? The government

What is it? A one-off business grant for small businesses of £3,000

Why? The government recognises that the business rate relief won’t affect very small businesses, as they’re unlikely to pay business rates anyway, this is a measure to help those businesses cover their bills

Who’s it for? Small businesses in England, Scotland, Wales and Northern Ireland

How does it help? £2.2bn has been released to local authorities for this grant purpose

How to apply? This is another one that’s not been fully ironed out yet.  As yet, there is no available information detailing how to apply for this grant.

  • Time to Pay arrangements for tax purposes

Who from? HMRC

What is it? A dedicated helpline for businesses and individuals in financial distress with outstanding tax liabilities

Why? The economic downturn has already taken effect, a knock on effect is people being unable to pay tax bills

Who’s it for? Anyone with an outstanding tax liability

How does it help? It’s been said that HMRC will, potentially, be putting bespoke pay agreements in place for outstanding tax bills

How to apply? Call 0800 0159 559, this is HMRC’s dedicated helpline

  • Employment and support allowance

Who from? It’s a benefit from the government

What is it? Employment and support allowance already exists, and is available for people with a disability or health condition that affects how much work they can do.  Changes have been made to the benefit to support self-employed people suffering with coronavirus

Why? It’s recognised that when the self employed can’t work, they’re not earning any money

Who’s it for? The new changes don’t affect those already claiming this benefit, instead they extend the benefit to the other eligible self employed people who have to stay home and are unable to work due to the virus – the Minimum Income Floor (assumed level of income) will not be applied for a period of time while they are affected

How does it help? Those suffering with coronavirus will be able to apply for Universal Credit and can get a month’s advance up front without physically attending a job centre.  The 7 waiting days for new claimants will not apply if they are suffering from coronavirus or are required to stay at home, so it will be payable from day one

How to apply? Universal Credit can be applied for online or by calling 0800 328 5644 (option 2)

Some of these measures are likely to help in the coming months, however with many of them being new measures without a supporting process they do not immediately relieve the financial effect the virus is having on many people.  With that in mind, here’s some practical points.

Practical Measures

Cash Flow

Your business cash flow is always of paramount importance, and now is no different.  Cash flow management and forecasting is key to supporting a business through a bumpy financial period.  Here are a few things to think about:

  • Cost cutting; if your business has been immediately affected by the situation, what costs can you immediately cut back on to help smooth the bumpy time?  Identify them, then cut them
  • Negotiating terms; the idea is always to marry up your incoming and outgoing funds, so money comes in before it goes out.  Hopefully this is how your cash flow works, if not though now’s the time to make it work!  Get negotiating with those suppliers…the worst that can happen is they say no
  • Take a finance break; do you have business loans and finance?  If your business has taken an immediate cash hit as a result of the virus, then why not ask for a break?  A break from monthly repayments could help you get through the next month or so, until the immediate impact of the virus dissipates and/or the government’s measures are realised.  Again, the worst that can happen is the finance company says no
  • Chase that old debt!  Have invoices that have been sat unpaid for weeks?  Well hopefully you’ve been chasing this money already – and if not, why on earth not?!  Now’s the time to ramp up the chasing though, because clearing those invoices will give you bank balance a boost

Be Smart, and Tech Savvy

The usual rules don’t apply right now.  Whereas proposing an online video meeting with a client or customer may have not been a good thing to do two weeks ago, right now it’s not only perfectly fine, but a lot of people are preferring it. 

So, get virtual!

Can you change your yoga class to a virtual one, with everyone logging into a Zoom webinar for you to lead it?  Can you run an online workshop?  Can that networking meeting now be a webinar? 

What smart things can you do to keep your business going in a virtual environment until things calm down?

Now’s the time to figure that out and take action! 

Online meetings are the easy first win – plus you’ll save travel time, bonus!  It’s important you adapt the best you can in this environment.  For some businesses this will definitely be easier than others.  Just try to be as versatile as you can be.

That’s it for now…

Watch this space for another post about how to apply for the measures mentioned above, once the government puts the necessary steps in place.

Business Support Helplines have also been set up across the nation – here’s the details:

England

The Business Support Helpline for England is also on:

Scotland

  • Telephone: 0300 303 0660
  • Textphone: 0800 023 2071
  • Monday to Friday, 8:30am to 5:30pm

Wales

  • Telephone: 0300 060 3000
  • Monday to Friday, 8:30am to 5:30pm

Northern Ireland

  • Telephone: 0800 181 4422
  • Monday to Friday, 8:30am to 5pm

There’s likely to be call charges attached to the above – here’s a link to the gov.uk website with this information on https://www.gov.uk/business-support-helpline

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Share This
Scroll to Top