This is a summary of a FSB webinar at 2pm on 27th March 2020 explaining in outline support made available for businesses and also finance available at this time. Full details of the support for business can be found here
The FSB explained that it was clear from discussions with the Government that the best possible deal was obtained on behalf of business owners and that some classes of businesses would be excluded. HMRC had self employment data (only) to 5th April 2019. All government resources are to go into the introduced schemes. Jan Szczepanski comment: It seems to me that the Government went for the simplest scheme to implement covering as many people as possible, “simple” being ease of implementation as quickly as possible. Therefore they felt it was inevitable certain people wouldn’t be covered, for example Director/shareholders paid by dividends, new start self employed. So they have data for self employed people for years to 5th April 2019, so that is what they will use.
FSB pointed out Directors of Limited Companies to the Job Retention Scheme covering their salaries (only).
For new start self employed, they need to look to Universal Credit which has just recently been extended (where your savings are under £16,000); there is also support for housing costs.
The deferral of Income Tax (& NI) Payments on Account due 31 July 2020 and also current quarter VAT amounts due were also mentioned by the FSB.
The Business Interruption Loan Scheme was explained in depth together with other aspects of finance support:
The Business Interruption Loan Scheme was noted as an additional tool to normal lending from banks. Presently bank lending is 3 to 5 times higher than normal; a lot is going on here and your bank is the first place you should go for finance help. Capital repayment holidays are also available from the banks.
The new loan scheme is available through banks (see online listing of the banks who have been accredited, including challenger banks, more are being added). The business must have been viable before this crisis and need to be confident they will be fine in the future after the crisis. Full business plans and numbers will be required as normal. There are few sector limitations (usually there are excluded sectors but not at this moment). There is no cap on the money available from each bank and the loans will be available into the future, so no hurry for you to access this. Just apply by way of your bank, as normal. There are already 40,000 applications but they are all progressing steadily. This a big decision for a business owner as they still need to pay it back and this therefore requires some confidence in the future of the business. Go online to apply. There were initial requirements for personal guarantees but banks are now back tracking on this (charges on residential property aren’t allowed). This loan will cover working capital. Banks should be responsive.
Business Rates: the support for this was explained and can be found in the link below:
Residential mortgage: interest and capital standstill
Commercial mortgage: capital payment standstill but interest continues to be charged. However The Business Interruption Loan Scheme instead offers 12 months interest free.
Self employed Income Support Scheme: you have to have lost profits due to the crisis. The scheme is supposed to be simple, a tick in a box. The support from Universal Credit should be taken seriously to cover gaps for the self employed.
Can Company Directors furlough? FSB advised, yes as long as you stop working; statutory duties can still be exercised.
Individual cannot be partially furloughed.
Other finance: The most relevant is asset backed finance including invoice finance, an already very important source of finance. FSB felt that slow payment by large companies was shocking; they felt that if that company had finance issues, then this was acceptable, otherwise not. Factoring is another good source of finance, especially as they have experience chasing debt. Also don’t forget equity, business angels for example; this is a viable option where a company has prospects. Don’t forget alternative finance, including peer to peer lending (cannot be considered for the new Government loan scheme).
The National Minimum Wage is still going up on 1st April 2020.
Employment Allowance to go up £1,000 to £4,000 from next tax year.
FSB summarised by saying that they will continue to press Government for classes of people not covered by the support schemes. They understand that cash is key now…….