A round-up of government support for business as tech rides to the rescue
As science finally presents us with a way out of the coronavirus nightmare in the form of a vaccine, the UK Government has announced renewed loan, grant and furlough packages to support business.
News of the effectiveness of a COVID-19 vaccine under development by Pfizer, BioNTech and Oxford University was a welcome ray of sunshine earlier this month.
The vaccine is also a triumph for innovation, using a totally new approach to creating vaccines based on the messenger RNA technique. It’s cheaper than conventional methods, and faster – we have a working vaccine within months of the virus emerging.
The Pfizer vaccine is one of several in the final stages of testing and has a likely 90% effectiveness. That offers real hope that we might see some kind of return to normality by spring 2021.
In the meantime, as the UK grapples with a second wave, Chancellor Rishi Sunak has taken decisive steps to provide stability to businesses in what will hopefully be the home stretch.
Business loans extended
While much attention was on the furlough scheme – more on that in a moment – for businesses that were able to keep trading during 2020, the various Government-backed loan schemes were more interesting.
There are three main schemes:
● the coronavirus business interruption loan scheme(CBILS)
● the coronavirus large business interruption loan scheme(CLBILS)
● bounce-back loans (BBLs)
Having been scheduled to close to applicants at various dates in the final quarter of 2020, all three have now been extended until 31 January 2021.
CBILS is open to UK-based SMEs with an annual turnover of up to £45 million, and provides loans of up to £5 million.
The terms are, as you might expect, extremely favourable and if you can demonstrate that your business is (a) viable but (b) has also been knocked by COVID-19, you should look into it.
CLBILs is similar but aimed at bigger firms turning over £250 million or more.
The smaller bounce-back loans are suitable for all kinds of businesses and have fewer barriers to access. They go up to £50,000 and are interest free for a year, with no repayments required in that period.
One interesting footnote on BBLs is that the Chancellor has said firms which took out a small loan earlier this year can now top it up, borrowing more up to the £50k limit.
Furlough to March
To the frustration of accountants and payroll administrators up and down the country, the job support scheme (JSS) which was set to kick in from November was scrapped at the last minute.
Instead, in a surprise announcement on 31 October, Rishi Sunak announced his intention to keep the coronavirus job retention scheme (CJRS) open until December. This was intended to cover the four-week emergency lockdown announced by the Prime Minister on the same day.
Then, only a few days later, he went further, announcing that CJRS, also known as the furlough scheme, would stay in business until March 2021.
It will see the Government pay 80% of salary for any employee unable to work due to coronavirus restrictions, with the employer expected to cover the cost of National Insurance and pension contributions.
Support for the self-employed
At the same time as extending furlough, the Chancellor also reversed a decision to reduce the level of support available via the self-employed income support scheme (SEISS).
The third grant, covering the period November 2020 to January 2021, will provide a taxable lump sum covering 80% of three months' average monthly trading profits, capped at £7,500.
This will be a great relief to self-employed people, including contractors and technical specialists, whose work has reduced or dried up as clients tighten their belts.
The terms of a fourth grant, running up to April 2021,haven’t been announced yet, however.
Nor has there been any movement on support for self-employed people acting as directors of their own limited companies, many of whom have been unable to access either SEISS or the furlough scheme in a meaningful way.
The autumn spending review and Spring Budget
There might be more to come yet. Although the planned autumn Budget has been cancelled, the Chancellor is due to speak on 25 November.
It’s being trailed as a low-key event but who knows what might emerge. Suffice to say, we’ll keep you posted.
For advice on accessing government support for business, from loans to furlough schemes, get in touch.