As the UK goes back into full lockdown to slow the winter spread of Covid-19, Rishi Sunak unveils an additional £4.6 billion to help the businesses most affected by the loss of trade. Read on to see what’s available and whether you may be eligible. Article by Nick Green.
The Chancellor has announced a further package of help for the businesses most affected by the new national lockdown, namely shops, restaurants, pubs, hotels, leisure facilities and others in the retail and hospitality industries that have been forced to close their doors. The new package takes the forms of grants – not loans this time – worth up to £9,000 per property affected. In total around 600,000 business properties across the UK are expected to be eligible.
A further £594m is being made available to local authorities and the devolved administrations of Scotland, Wales and Northern Ireland, which these authorities can use to support those firms that do not qualify for the grants. The exact form that this help will take is not yet known, as it will be at the discretion of those administrations.
In total the new lockdown support package is worth around £4.6bn. Rishi Sunak has set this amount based on the assumption that the lockdown will be in place until mid-February (school half term). If the lockdown needs to continue beyond this date (as may well become necessary, based on past experience) then further government support may be required. However, the government tends to play its cards close to its chest, so at this stage we can only guess at how much further support might become available in the spring.
How much lockdown grant will my business be eligible for?
The grants will be available only to businesses in the retail, leisure and hospitality industries. The government is describing them as ‘one-off top-ups’, so they are not regular payments. The size of the grants available will be based on the size of the business properties in question – or more specifically, on their ‘rateable value’ (the notional value of the property that is used to calculate business rates). The grant amounts are calculated as follows:
Rateable value of business property
Up to £15,000
Between £15,001 and £51,000
What other support is still available?
The new lockdown grants come in addition to existing measures to support businesses of all types that may be affected by the lockdown. These include:
Business rates relief
Businesses in the most affected sectors (i.e. leisure, hospitality and retail) continue to receive 100% business rates relief for the time being.
Local Restriction Support Grants
Provided via local authorities, Local Restriction Support Grants are worth up to £3,000 per month per business if they are forced to close, and up to £2,100 for the affected business once it reopens. The government has set aside a further £1.1bn for these.
Furlough scheme extended to April
The Coronavirus Job Retention Scheme (commonly known as ‘furlough’) and its equivalent for self-employed people, the self-employed income support scheme (SEISS), have both been extended until April. Businesses in all sectors can use furlough.
Government-backed ‘Covid loans’
The two government-backed loans – the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce-Back Loan – have both been extended until the end of March. For both schemes, the deadline for application is before midnight on 31 March 2021. Businesses in all sectors can apply for these loans.
A Bounce-Back Loan lets you borrow between £2,000 and £50,000 with no repayments due for a year, and no interest charged during that time either. After 12 months, interest will be charged at a fixed 2.5 per cent per year. A CBILS loan lets you potentially borrow much more – up to £5m – but at a higher rate of interest (up to 6%) and they can be harder to get, with nearly one in two applications being rejected.
How do I apply for the new lockdown grants?
Applications for the new lockdown grants should be made via your local authority. Also ask your local authority about any other support that may be available for your business at their discretion.
More businesses could take advantage of government support
Recent research by Unbiased has shown that many small businesses failed to take full advantage of all the help that was available to them during the first lockdown. In a study of over a thousand SMEs, Unbiased found that only around 1 in 5 used one of the government loan schemes (though uptake varied by business size, with larger SMEs using them more) and fewer than 4 in 10 used the furlough scheme. Meanwhile only around a quarter of self-employed people decided to ‘furlough themselves’ using an SEISS grant.
In one sense this is encouraging, as it shows that many businesses still felt able to stand on their own resources. However, the new lockdown overlaps with winter and so may yet become even stricter than the first, if cases fail to fall quickly enough. Unbiased also learned that around a fifth of SMEs with more than 50 staff were forced to make redundancies during the first lockdown, despite the existence of the furlough scheme. Therefore, any business in any doubt about making it through to the spring should investigate the help on offer, while it remains available.
If you’re not sure what help your business may be eligible for, your accountant can advise you. Find out other ways that your accountant can help during lockdown.