Further Financial Support for Businesses – Updated 5 November 2020
Below is an outline of the support package announced by the Chancellor, if you would like to discuss these measures and how they apply to your business feel free to make contact with us.
Financial support for local businesses in England
• Businesses in England that are forced to close due to national or local restrictions will receive up to £3,000 per month. This is worth over £1 billion a month with the new restrictions in place, and will benefit over 600,000 business premises.
• 90% of small and medium sized business premises in the closed Retail, Hospitality and Leisure sectors should broadly have their monthly rent covered by these grants (based on VOA data on Rateable Values as the best proxy HMRC have for rent).
Guarantee loan schemes
• The Government has announced that it plans to extend the application deadline for loan schemes – that is, the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Future Fund, and Coronavirus Large Business Interruption Loan Scheme – to the end of January 2021. This will give businesses two extra months to make loan applications (relative to the current deadline of 30 November).
• The Bounce Back Loan Scheme rules will be adjusted to allow those businesses who have borrowed less than their maximum (i.e. the lower of £50,000 or less than 25% of their turnover) to top-up their existing loan. Businesses will be able to take-up this option from next week; they can make use of this option once. By doing this, the Government have acknowledged that some businesses didn’t anticipate the disruption to their business from the pandemic would go on for this long; this will ensure that they are able to benefit from the loan scheme as intended.
Mortgage and consumer credit payment holiday extension
• Mortgage payment holidays will continue to be available for homeowners in the UK. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a 6- month holiday and those that have already started a mortgage payment holiday will be able to top up to 6 months without this being recorded on their credit file. The FCA published draft guidance setting this out on 2 November 2020.
• Payment holidays will also continue to be available for consumer credit products such as personal loans and car finance. As with mortgages, borrowers impacted by coronavirus who have not yet taken a payment holiday on that product can ask for one of up to 6 months and those that currently have a payment holiday will be eligible to top up to six months without this being recorded on their credit file. Borrowers with high-cost short-term credit products such as payday loans will continue to be entitled to a maximum month payment holiday. The FCA published draft guidance on this on 4 November.
Recap of existing economic support for people and businesses
• Reduced VAT for hospitality, accommodation and attractions until the end of March 2021
• Business rates relief for hospitality, retail, leisure and nurseries until the end of March 2021 in England.
• The £20 per week increase to Universal Credit standard allowance, increases to Local Housing Allowance until the end of March 2021 – collectively worth over £7 billion this year.
• There is also a £1.57 billion Culture Recovery Fund and £750 million set aside for charities.
• £500 payments for those on low incomes in England who are asked to self-isolate for 14 days, and £500 million Hardship Fund for local authorities to use to help the most vulnerable.
• Millions of discounted, government backed loans.
• Extensive tax deferrals for general tax, VAT and Income Tax Self-Assessment.