Many businesses have been caught off guard by the speed of the COVID-19 outbreak and are having to quickly think through how best to tackle the impact of this virus.

We are all experiencing truly unprecedented times and we recognise that these are deeply worrying developments for all of us, but we are determined to do whatever we can to help our clients and the wider business community in the South West navigate through this crisis.

Our immediate focus is on providing up-to-the-minute hands-on practical information and advice to support businesses through this challenging period.

We will endeavour to keep on top of the relevant government updates and provide you with guidance around what financial support is available for businesses and how to access it.

We are also available to you to provide insight and expert advice on managing cash flow concerns, workforce advice and how to leverage technology and automation to optimise business operations.

Over the course of last week Rishi Sunak announced a £330 billion package of measures to support businesses experiencing increases in costs or financial disruption. SMEs are likely to be hardest hit, and additional fiscal measures to help the economy are likely to be introduced as the situation evolves.

Is funding available?

The information about funding is constantly changing and we will keep you updated around these uncertain times, we do know that cash is available for lending.  As you would imagine, lenders have seen a spike in applications, so it’s important to start any applications as early as possible.  Do remember, that releasing money is not always instant and can take between 4-12 weeks.

Talk to your existing relationship manager or your bank’s COVID helpline, if you don’t have an individual manager, they are there to help in the following areas;

• Granting working capital facilities to support trading businesses that are seeing a lengthening of the order-to-cash cycle and cost increase as a result of supply chain disruption
• Forward looking liquidity needs to adjust capacity to fit new demand patterns
• Cashflow to support working capital requirements by potentially offering a credit limit, based on unpaid invoices
• Business support and advice services
• Capital Repayment Holiday on variable rate lending
• Interest rate reductions
• Temporary emergency loans with no fees
• The granting of an overdraft or extension of existing overdraft limits.
• Customers with deposit balances in Notice and/or Fixed Term products have immediate access to cash with no penalty for immediate access

For your information the main banks’ COVID pages are:

Natwest: https://natwestbusinesshub.com/content/coronavirus-practical-advice-for-smes

RBS: https://www.rbs.com/rbs/news/2020/03/natwest-pledges-p5bn-working-capital-support-for-smes-during-cor.html

Lloyds: https://www.lloydsbank.com/business/coronavirus.html

Barclays: https://www.barclays.co.uk/business-banking/

HSBC: https://www.business.hsbc.uk/en-gb/gb/article/coronavirus

Santander: https://www.santander.co.uk/personal/coronavirus

In the recent Budget, the Chancellor announced that a ‘Coronavirus Business Interruption Loan Scheme’ (CBILS) will temporarily replace the Enterprise Finance Guarantee (EFG), becoming available over the coming weeks.

It will operate in a similar way to EFG and be provided by the British Business Bank, but will offer more attractive terms for businesses, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.

As well as loans, there are many other types of finance supported by the programme, depending on the provider.

CBILS provides the lender with a government-backed 80% guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

CBILS supports a wide range of business finance products, including:

• Term facilities
• Overdrafts
• Invoice finance facilities
• Asset finance facilities

To be eligible for support via CBILS, you must:

• Be UK based, with turnover of no more than £41 million per annum
• Operate within an eligible industrial sector
• Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements
• Be able to confirm that you haven’t received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years

An accredited lender can use CBILS to help a borrower access from £1,000 to £1.2 million.  Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

All of the main banks are participating.  A full list of lenders is available at: https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/efg-accredited-lenders/

Capitalise is an online funding platform which is similar in concept to a price-comparison site, and links to 105 different lenders to find the best-fit finance product which may exist outside of banks.

Our Corporate Finance team have access to this and can process applications for you, this can include:

• Extending Bank overdrafts
• Setting up a short-term facility (works a bit like an overdraft but usually separate to usual bank account)
• Business credit cards
• Invoice Financing
• Merchant Cash Advance

If you are a retail, hospitality or leisure business in England the government will introduce a business rates retail holiday for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

Any enquiries on eligibility for, or provision of, the reliefs should be directed to your local authority. (We understand that guidance regarding the business rates holiday will be published by 20 March.)

The government will also provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet ongoing business costs.

If you are eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.

We understand that funding for the scheme will be provided to local authorities by the government in early April. Guidance for local authorities on the scheme is still pending.

The dedicated HMRC helpline for businesses and self-employed individuals who have difficulty with paying their tax due to COVID-19 promised at Budget 2020 is now in operation. The number of the helpline is 0800 024 1222.

The helpline can assist with:

• setting up a time to pay arrangement,
• suspending debt collection proceedings, and
• cancelling late payment penalties and (unusually) interest.

2,000 experienced HMRC staff are said to be available on the helpline but there are still likely to be lengthy call-queues.

HMRC will bring forward legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:

• this refund will cover up to 2 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
• 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
• 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
• the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Businesses that have cover for both pandemics and government-ordered closure should now be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

For more information about any of these areas please contact your Old Mill adviser or email enquiries@om.uk