1. covid-19

Government support for the UK business community

(As of: 15 April 2020)

Coronavirus Business Interruption Loan Scheme (CBILS)

CBILS is open to small to medium-sized (SMEs) businesses in the UK to help them deal with the operating costs of their business and to assist in maintaining cashflow.

Is my business eligible? 

The scheme is available to all businesses having UK-based business activity with a turnover of £45 million or less, where at least 50 per cent of the business’s turnover is from ‘trading activity’.

Small businesses can receive up to £5 million, subject to approval by their chosen lender. This loan will remain interest-free for up to 12 months and is backed by the Government.

Accessing a loan 

The lender will consider your application and is likely to check first whether you qualify based on your existing business plan, accounts and cashflow projections.

The borrower will remain 100 per cent liable for the debt.

Coronavirus Job Retention Scheme (CJRS)

The Government has made several amendments to CJRS, first announced on 20 March.

CJRS is intended to reimburse up to 80 per cent of wage costs (capped at £2,500 per month) of a ‘furloughed worker’ – i.e. an employee remaining on the payroll, but not carrying out any work.

Government guidance had suggested that CJRS would only apply to employees on a PAYE payroll on 28 February who remain employed, and any employees either laid off or made redundant.

The new Government update makes clear that the scheme can also apply to former employees who were on the payroll on 28 February but who later resigned voluntarily.

• Employers can now re-employ such people, put them on furlough and claim for their wages through the scheme.

The update also clarifies that employers can make CJRS claims for:

• Employees shielding in line with public health guidelines, or who need to stay home with someone who is shielding, if they cannot work from home and would otherwise be made redundant.
• Employees who cannot work owing to caring responsibilities.
• Employees with more than one job who remain normally employed in their other employment.
• Directors of limited companies, including those who are directors of their own Personal Service Company, who may continue to carry out only their minimum statutory duties while furloughed.
• Off-payroll workers supplying services through a Personal Service Company in the public sector.
• Salaried members of limited liability partnerships (LLPs).

The CJRS furlough process differs for company directors and LLP members. Company directors can only be furloughed following a board decision.

The furlough of an LLP member may require an agreement between the LLP and the individual member concerned, or a variation of the terms of the LLP agreement. The CJRS reference salary will be the member’s profit allocation.

Personal loans, credit cards and overdrafts

The Financial Conduct Authority (FCA) is fast-tracking new measures to help individuals whose finances are affected by the Coronavirus outbreak.

The measures, arranged to be enforced on banks from 9 April 2020, will include: 

• A three-month repayment freeze on loans.
• A temporary freeze on credit card and store card debt up to three months.
• Zero-interest for three months on up to £500 for Coronavirus affected customers using an arranged overdraft for up to three months.

The FCA wants to ensure that “consumers are no worse off and not paying more than they would have under previous prices."

It is not yet clear if these measures will apply automatically or whether borrowers will have to apply for them. Speak to your bank or lender to clarify your position. 

The FCA says consumers using any of these measures should not see their credit ratings affected.

If you need professional support or advice with any matters covered in this Vale & West update, please speak to a member of our team today.