Out-Law / Your Daily Need-To-Know

Coronavirus: UK Business Support Mechanisms

Out-Law Guide | 28 May 2020 | 1:26 pm | 10 min. read

The UK government and devolved administrations have been developing and announcing a range of measures aimed at supporting the economy, businesses and workers through the COVID-19 crisis.

  1. COVID-19 Corporate Financing Facility (CCFF)
  2. Coronavirus Business Interruption Loan Scheme (CBILS)
  3. Coronavirus Large Business Interruption Loan Scheme
  4. Coronavirus job retention scheme
  5. Term Funding Scheme with additional incentives for SMEs (TFSME)
  6. Business Rates
  7. Small Business Grant Fund (SBGF)
  8. Retail, Hospitality and Leisure Grant (RHLG)
  9. Coronavirus Business Support Grants
  10. Future Fund
  11. ESFA post-16 provider relief scheme
  12. Bounce Back Loans scheme
  13. Pivotal Enterprise Resilience Fund
  14. Trade Credit Insurance
  15. Statutory Sick Pay
  16. General Taxation - Time to Pay
  17. Insurance
  18. Companies House
  19. Mortgage Holidays
  20. Deferred VAT payments
  21. Self Employed Income Support Scheme
  22. Reform of Insolvency law

COVID-19 Corporate Financing Facility (CCFF)

Policy

To support larger firms, the Bank of England will operate a new lending facility to provide a quick and cost effective way to raise working capital via the purchase of short-term debt.

The CCFF will be a credit easing scheme targeted at addressing the disruption to cash flows of companies resulting from Covid-19. The scheme will focus on purchasing newly-issued Commercial Paper from eligible companies. The CCFF is unlimited in size.

The scheme went live on Monday 23 March and is set to run for at least 12 months.

On 19 May 2020, the Treasury announced that issuers participating in the CCFF may be required to commit to restraint on their capital distributions and on senior pay.

Jurisdiction

UK-wide

Eligibility Criteria

Eligibility for the facility will be based on firms’ credit ratings prior to the Covid-19 shock.

The scheme is open to all non-financial businesses who will also be judged, in part, on whether or not they:

  • make a material contribution to economic activity in the United Kingdom
  • have significant employment in the UK or with their headquarters in the UK
  • generate significant revenues, serves a large number of customers or has a number of operating sites in the UK
  • are UK incorporated companies including those with foreign-incorporated parents and with a genuine business in the UK

How to apply

Applications can now be made through the Bank of England's website.

Further information

Further details of the scheme can be found at the Bank of England

More information on the eligibility criteria can be found at the Bank of England

Further details of the scheme can be found at the Treasury

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Coronavirus Business Interruption Loan Scheme (CBILS)

Policy

A scheme aimed at supporting SMEs to access bank lending and overdrafts, which will be delivered through the British Business Bank.

Key provisions include:

  • The government will provide lenders with a guarantee of 80% on each loan to give lenders confidence in continuing to provide finance to SMEs
  • The government will not charge businesses or banks for this guarantee
  • The provision of support loans of up to £5 million in value. The government will cover the first 12 months of interest payments for businesses.

Jurisdiction

UK-wide

Eligibility Criteria

Applicants must:

  • Apply for business related purposes only
  • Use the scheme to support primarily trading in the UK
  • Be a UK-based SME with annual turnover of up to £45m
  • Be seeking to borrow up to a maximum of £5m
  • Generate more than 50% of its turnover from trading
  • Have a borrowing proposal which would be considered viable by the lender

Further criteria can be found here.

Additional Information:

  • No personal guarantees for facilities under £250k
  • Personal guarantees for facilities above £250k capped at 20% of outstanding balance
  • Insufficient security is no longer a condition to access the scheme, opening up access to business who would previously have met requirements for a commercial facility and as such been ineligible for CBILS

How to apply

Any small business interested in applying should approach their lender in the first instance or one of the 40+ accredited lenders with their borrowing proposal.

The British Business Bank states that applications should take no longer than a standard application.

The scheme is now open.

Further information

Further details of the scheme can be found at the British Business Bank

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Coronavirus Large Business Interruption Loan Scheme

Policy

The CLBILS scheme will provide a government guarantee of 80% to enable banks to make loans of up to £200m to firms with an annual turnover of more than £45m.

Finance terms can last for between three months to three years and is available in the form of:

  • term loans
  • revolving credit facilities (including overdrafts)
  • invoice finance
  • asset finance

It is delivered through commercial lenders, backed by the British Business Bank with the government providing lenders with an 80% guarantee on individual loans for businesses.

The scheme is now live.

Jurisdiction

UK-wide

Eligibility Criteria

Businesses must:

  • Be UK-based in its activity
  • A "viable" businesses with turnover of more than £45m
  • Be unable to secure regular commercial financing
  • Have a borrowing proposal which the lender: a) would consider viable, were it not for the COVID-19 pandemic / b) believes will enable you to trade out of any short-term to medium-term difficulty

Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000.

Excluded sectors include:

  • Banks and building societies / Insurers and reinsurers / Public-sector organisations, including state-funded primary and secondary schools / Trade unions

How to apply

Any small business interested in applying should approach their lender in the first instance or one of the 40+ accredited lenders with their borrowing proposal.

The British Business Bank states that applications should take no longer than a standard application.

Further information

Further details of the scheme can be found at the British Business Bank

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Coronavirus job retention scheme

Policy

Under this scheme all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during the crisis.

The government will pay up to 80% of a worker’s wages, up to a total of £2,500 per worker each month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.

These payments will be backdated to 1 March and the scheme will run until October 2020.

HMRC are working to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.

Jurisdiction

UK-wide

Eligibility Criteria

All UK businesses.

Eligibility for employees has been extended to 19 March 2020. It had previously been set at 28 February 2020.

How to apply

Business must designate affected employees as ‘furloughed workers,’ and notify its employees of this change.

Business should be aware that changing the status of employees' remains subject to existing employment law.

Businesses should submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy and at the Business Support website

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Term Funding Scheme with additional incentives for SMEs (TFSME)

Policy

The TFSME will offer four-year funding of at least 10% of participants’ stock of real economy lending at interest rates at, or very close to, Bank Rate.

The Scheme is intended to:

  • help ensure that businesses and households benefit from the MPC’s actions;
  • provide participants with a cost-effective source of funding to support additional lending to the real economy;
  • incentivise banks to provide credit to businesses and households to bridge through a period of economic disruption;
  • provide additional incentives for banks to support lending to SMEs.

Jurisdiction

UK-wide

Eligibility Criteria

Banks and building societies that are participants in the Bank of England’s Sterling Monetary Framework (SMF) and that are signed up to access the Discount Window Facility (DWF).

SMF participants that are not already signed up to the DWF can apply for access alongside applying to use the TFSME.

Institutions that are not currently SMF participants can apply to join, subject to the Bank of England's usual eligibility criteria.

How to apply

Applications can be made from mid-March 2020 when further documentation will be made available.

The scheme opened on 15 April 2020.

Further information

Further details of the scheme can be found at the Bank of England

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Business Rates

Policy

All businesses in the retail, hospitality and leisure sectors will pay no business rates in England and Scotland for the 2020/2021 tax year.

There will be no rateable value threshold on this relief – businesses large and small will benefit.

The Scottish Government also announced that Scottish airports will get 100% rates relief for a year, as will organisations providing handling services for scheduled passenger flights at Scottish airports.

Jurisdiction

UK-wide

Eligibility Criteria

Full criteria for businesses in England

How to apply

The government has said that this will apply to the next council tax bills issued in April 2020.

The government advises businesses to direct enquiries on eligibility for, or provision of, the reliefs to the relevant local authority.

Further information

Further details of the scheme can be found at the Ministry of Housing, Communities and Local Government and at the Department of Business, Energy and Industrial Strategy

Corresponding commitments have been made by the Scottish government

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Small Business Grant Fund (SBGF)

Policy

The UK Government announced there would be support for small businesses, and businesses in the retail, hospitality and leisure sectors.

Under the SBGF all eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.

Eligible recipients will receive one grant per property

Jurisdiction

England only

Eligibility Criteria

Businesses with a property on the 11 March 2020 that was eligible for SBRR, including those with a Rateable Value between £12,000 and £15,000 which receive tapered relief.

Businesses which on 11 March 2020 were eligible for relief under the RRR Scheme are also eligible for this scheme.

Recipients cannot receive both SBGF and RHLG (below) on the same property.

How to apply

Eligible businesses will be contacted by the relevant local authority.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy

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Retail, Hospitality and Leisure Grant (RHLG)

Policy

The UK Government announced there would be support for small businesses, and businesses in the retail, hospitality and leisure sectors.

Under the RHLG eligible businesses in England in receipt of the Expanded Retail Discount with a rateable value of less than £51,000 will be eligible for a cash grants of £10,000 or £25,000 per property.

Eligible recipients will receive one grant per property.

Jurisdiction

England only

Eligibility Criteria

Properties which on the 11 March 2020 had a rateable value of less than £51,000 and would have been eligible for a discount under the business rates Expanded Retail Discount Scheme had that scheme been in force are eligible for the grant. Charities which would otherwise meet this criteria but whose bill for 11 March had been reduced to nil by a local discretionary award should still be considered to be eligible for the RHL grant.

Recipients cannot receive both SBGF (above) and RHLG on the same property.

How to apply

Eligible businesses will be contacted by the relevant local authority.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy

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Coronavirus Business Support Grants

Policy

The Scottish Government announced its own grant scheme for retail, hospitality and leisure businesses with a rateable value between £18,001 and £51,000, who will be able to apply for a one-off grant of £25,000.

A one-off grant of £10,000 will also be available to small businesses who get:

  • Small Business Bonus Scheme relief
  • Rural Relief

The Scottish Government's scheme will provide a 100% grant on the first property, and a 75% grant on all subsequent properties for all small business rate payers.

Jurisdiction

Scotland only

Eligibility Criteria

Businesses must be:

  • in receipt of the Small Business Bonus Scheme
  • in receipt of Rural Relief
  • a hospitality, leisure or retail business
  • eligible for the small business bonus scheme but in receipt of Nursery Relief, Disabled Relief, Business Growth Accelerator Relief or Fresh Start

How to apply

The Small Business Grant Fund will be in place to receive applications on 5 May 2020.

Further information

Further details of the scheme can be found at the Scottish Government

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Future Fund

Policy

The scheme will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

The government has made an initial commitment of £250 million to the scheme, and it will deliver the scheme in partnership with the British Business Bank.

The headline terms of the Future Fund set out:

  1. The minimum amount of the loan provided by the Government will be £125,000
  2. Loans will be used solely for working capital purposes
  3. The Government shall receive a minimum of 8% per annum interest to be paid on maturity of the loan.

Jurisdiction

UK-wide

Eligibility Criteria

Businesses must:

  1. have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years
  2. be the ultimate parent company if it is a member of a corporate group
  3. not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue
  4. be a UK incorporated limited company
  5. have been incorporated on or before 31 December 2019
  6. have either half or more of its employees based in the UK OR have half or more of its revenues from UK sales

How to apply

Applications can be made via the British Business Bank

Further information

Further details of the scheme can be found at the British Business Bank

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ESFA post-16 provider relief scheme

Policy

The government has introduced this scheme to retain capacity within the apprenticeships and adult education sector.

Therefore, in line with Cabinet Office guidance the government is introducing payment measures in the form of a provider relief scheme.

The scheme is aimed at further education colleges, independent training providers, higher education institutions and other organisations who hold contracts for services to deliver adult education or apprenticeship provision for smaller employers that do not pay the levy (non-levy).

Jurisdiction

England

Eligibility Criteria

To be eligible to apply for support a provider must hold a direct contract that was procured as a service under Public Contract Regulations 2015.

Detailed eligibility criteria can be found here.

How to apply

Applications can be made online, via the Education and Funding Skills Agency.

Further information

Further details of the scheme can be found at the Education and Funding Skills Agency.

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Bounce Back Loans scheme

Policy

The scheme will provide loans of up to £50,000 to small and medium sized businesses which will be 100% guaranteed by the government.

The loans will be interest free for the first 12 months and no repayments will be due during this time.

Jurisdiction

UK-wide

Eligibility Criteria

A business can apply if it:

  • It is based in the UK
  • It has been negatively affected by coronavirus
  • It was not an ‘undertaking in difficulty’ on 31 December 2019

A business cannot apply if it is already claiming under the CBILS.

How to apply

Businesses applying for the scheme should approach one of the Accredited Lenders.

More information on applying can be found at the British Business Bank.

Further information

Further details of the scheme can be found at the Department for Business, Energy and Industrial Strategy and the British Business Bank.

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Pivotal Enterprise Resilience Fund

Policy

This Scottish Government grant is aimed at businesses that could play a critical role in supporting Scotland’s recovery but need immediate support.

Jurisdiction

Scotland

Eligibility Criteria

A business can apply if it:

  • has up to 249 employees and has been trading successfully before Covid19
  • has less than €50 million turnover or balance sheet total of €43 million
  • can demonstrate the funding will support business to be viable
  • was not in financial difficulty before 31 December 2019
  • is a Fair Work employer or working towards becoming a Fair Work employer

How to apply

Applications can be made on the Scottish Government's partner website.

Further information

Further details of the scheme can be found on the Scottish Government's Business Support website.

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Trade Credit Insurance

Policy

Trade Credit Insurance provides cover for business to business transactions in sectors such as manufacturing and construction.

To overcome the impact Covid-19 is having on some businesses, the government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance.

The scheme will be delivered through a temporary reinsurance agreement with insurers currently operating in the market.

The government has said it will be provisionally in place until the end of the year, but is designed to overcome the economic challenges caused by Covid-19.

Jurisdiction

UK-wide

Eligibility Criteria

The scheme will provide cover trading by domestic firms and exporting firms.

How to apply

Awaiting further details

Further information

The UK government has committed to publishing further details in due course.

The government will work with businesses and the industry on the full details of the scheme to ensure firms are supported and risk is appropriately shared between the government and insurers.

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Statutory Sick Pay

Policy

The government has introduced legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.

Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.

Jurisdiction

UK-wide

Eligibility Criteria

This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19. 

Employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020.

Eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force.

How to apply

Further detail is expected but the government has committed to working with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy

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General Taxation - Time to Pay

Policy

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

Jurisdiction

UK-wide

Eligibility Criteria

All businesses and self-employed people with outstanding tax liabilities.

How to apply

To access the scheme, businesses should contact HMRC.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy

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Insurance

Policy

The government has said that businesses that have cover for pandemics and government-ordered closure should be covered by the announcements that the government has made on the subject of social distancing.

However it advised that insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

Jurisdiction

UK-wide

Eligibility Criteria

N/A

How to apply

N/A

Further information

Further details of the scheme can be found at the Association of British Insurers

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Companies House

Policy

Companies House has issued guidance that allows businesses to apply for an extension to the deadline for submitting their accounts, should a company be affected by COVID-19.

Jurisdiction

UK-wide

Eligibility Criteria

Appeals are treated on a case-by-case basis. Appeals based upon COVID-19 will be considered under these policies, and will be considered under policies already in place to deal with appeals based upon unforeseen poor health.

How to apply

To apply, businesses need to provide the following information:

  • company number;.
  • email address;
  • any relevant supporting documents

Further information

Further details of the scheme can be found at Companies House

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Mortgage Holidays

Policy

The chancellor has announced an agreement with mortgage lenders that they will offer a three month mortgage holiday for borrowers in financial difficulty due to coronavirus.

Jurisdiction

UK-wide

Eligibility Criteria

A payment holiday will be available to all customers who are up to date on their mortgage payments.

A payment holiday will also be available to all Buy-to-Let landlords whose tenants have lost income because of the impact of COVID-19. Landlords are expected to pass on this relief to their tenants to ensure that they are supported during this time.

Customers will still owe the money where a payment holiday has been granted and interest will still accrue.

How to apply

Customers should contact their mortgage lender for more information.

Further information

Further details of the scheme can be found at the Treasury

Further details of the scheme can also be found at UK Finance

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Deferred VAT payments

Policy

Businesses will have their VAT payments deferred for three months, and self-employed Income Tax payments will be deferred from July 2020 to January 2021.

Jurisdiction

UK-wide

Eligibility Criteria

All UK businesses.

How to apply

No application necessary, this is an automatic scheme.

Further information

Further details of the scheme can be found at the Department for Business, Energy and Industrial Strategy

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Self Employed Income Support Scheme

Policy

The scheme provides those eligible with a cash grant worth 80% of their average monthly trading profit over the last three years.

The income support scheme is being designed by HMRC from scratch, will cover the three months to May.

Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.

To qualify, more than half of their income in these periods must come from self-employment.

Jurisdiction

UK-wide

Eligibility Criteria

To qualify workers must:

Be self-employed or a member of partnership;

  • Have lost trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021

An applicants trading profits must also be no more than £50,000 and more than half of your total income for either:

  • the tax year 2018 to 2019
  • the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019

How to apply

HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.

HMRC has also launched an eligibility tool for potential customers of the scheme.

Further information

Further details of the scheme can be found at HMRC and at the Business Support website

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Reform of Insolvency law

Policy

The government has announced its intention to amend insolvency law to give companies breathing space and keep trading while they explore options for rescue.

This change follows a government consultation on introducing new insolvency restructuring procedures in August 2018.

Jurisdiction

Generally, UK-wide with some exceptions in Scotland.  

Eligibility Criteria

Awaiting further information

How to apply

Awaiting further information

Further information

Further details of the scheme can be found at the Department for Business, Energy and Industrial Strategy

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