Coronavirus support update Oct 22 - Chancellor Announcement

Coronavirus support update: the latest on Government funding for salaries, grants for businesses in lockdown, and loan schemes for SMEs

The Government has expanded its financial support schemes in a bid to help businesses hang on to their staff.

What are the Coronavirus support updates?

Announced on 22 October 2020 by Chancellor Rishi Sunak, the Job Support Scheme now provides a more generous contribution towards employee salaries. Open businesses that are experiencing difficulty will now only have to pay for 5% of employees’ unworked hours.

The business grants scheme has also been expanded to cover businesses facing reduced demand due to the impact of COVID-19 rules on socialising. Hospitality and leisure businesses hit by Tier 2 restrictions will be able to apply to their local councils for funding of up to £2,100 a month.

The expanded support is in addition to the previously announced Job Retention Bonus, the expanded Job Support Scheme for closed businesses, and the Local Restrictions Support Grant -also targeting businesses legally required to close.

Small businesses that have been adversely affected by coronavirus now have until 31 January 2021 to apply for Government support. That’s the extended deadline for small companies applying for finance under the Bounce Back Loan Scheme (BBLS), Future Fund, and for the Coronavirus Business Interruption Loan Scheme (CBILS).

Hospitality and leisure businesses hit by Tier 2 restrictions will be able to apply to their local councils for funding of up to £2,100 a month.

What is Pay as you grow option?

If you have not already done so, you can still apply for finance under the Bounce Back Loan. The repayment terms have been improved to support businesses that might be struggling. Known as “Pay as you Grow”, the new repayment options allow businesses to repay a BBLS loan over 10 years instead of 6, which nearly halves the average monthly payments.

Pay as you Grow also allows you to switch to interest-only payments for a six-month period, and to do this up to three times over the course of the loan. You’re also permitted to pause repayments altogether for up to six months, although you can only do this once.

Repayment terms for the Coronavirus Business Interruption Loan Scheme (CBILS) have also changed. The allowable repayment period has been increased, with lenders now permitted to allow businesses to repay CBILS loans over a 10-year period.

If you’re applying for CBILS credit, which could be a loan, overdraft, invoice finance or asset finance, you can use our free Liquidity shortfall calculator to work out how much funding you’ll require in the months ahead.

Pay as you Grow allows a business to switch to interest-only payments for a six-month period, and to do this up to three times.

How Credit Passport can help?

It’s easy to apply for BBLS or CBILS funding from the Credit Passport dashboard. In the C-19 Tools section, simply follow the link under ‘Find Funding’ to register online on our partner Funding Portal.

You can also demonstrate that your business finances were healthy before COVID-19 using our free Credit Passport Pre-Crisis Report tool. It generates a report showing the state of your finances in February, before the pandemic had a widespread impact.

Using Credit Passport to generate a credit report, compiled from historic accounts and real-time banking data, gives you an accurate picture of the financial health of your business. Displayed as a badge, it gives you a credit score from Excellent (A++) down to E.

Government-backed finance schemes:

Bounce Back Loan Scheme (BBLS)

• What it’s for: quick access to small sums to aid cashflow
• Credit type: term loan
• Deadline for applications: 31 January 2021
• Amount you can borrow: £2,000 to £50,000 (up to 25% of turnover)
• Repayments: none in first year
• Interest rate: 2.5% a year. Government pays interest in first 12 months.
• Repayment period: 6 years (or 10 years under Pay as you Grow).
• How to apply: Read the full eligibility criteria on the British Business Bank website, then contact your own bank, if accredited. Other accredited banks are listed on the British Business Bank website. 

CBILS

• What it’s for: larger credit facilities for businesses with under £45m turnover
• Credit type: Loans, overdrafts, invoice finance, and asset finance
• Deadline for applications: 31 January 2021
• Amount you can borrow: up to £5m
• Interest rate: Varies. Government pays interest and fees in first 12 months.
• Repayment period: up to 10 years (term loans and asset finance) / up to 3 years (overdrafts and invoice finance).
• How to apply: Read the full eligibility criteria on the British Business Bank website. Contact an accredited lender (you can apply using the Credit Passport Funding Portal - which can speed up the process and help guide you through your best options.

FUTURE FUND

• What it’s for: Innovative companies with equity investment
• Credit type: convertible loans
• Deadline for applications: 31 January 2021
• Amount you can borrow: £125,000 to £5m (requires matching private funding and at least £250,000 of previous equity investment)
• Interest rate: At least 8% per annum
• Repayment period: 3 years
• How to apply: Read the full eligibility criteria on the British Business Bank website. The investor makes an application via this website.

Government support schemes:

JOB SUPPORT SCHEME

• What it’s for: replaces the furlough scheme from 1 November. Contributes to salaries of employees with viable jobs in companies facing reduced demand.
• When it’s available: from 1 November for six months.
• Amount: Up to £1,541.75 per month. (Government pays 61.67% of employee wages for hours not worked). Employers pay for worked hours and 5% of unworked hours.
• Eligibility: Employers with a UK bank account and UK PAYE scheme, registered on or before 23 September 2020. Large businesses (but not SMEs) will have a financial assessment. Employees must work at least 20% of normal hours.
• How to apply: Online through gov.uk - https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme

JOB SUPPORT SCHEME EXPANSION FOR CLOSED BUSINESS PREMISES

• What it’s for: contributes to employees’ salaries in companies that are legally required to close due to local or national Coronavirus-related restrictions.
• When it’s available: from 1 November for six months, reviewed in January 2021.
• Amount of payment: Two-thirds of each employees’ salary, up to £2,100 a month. (Employers must still pay NICS and pension contributions).
• Eligibility: Employers with a UK bank account and UK PAYE scheme, registered on or before 23 September 2020. The grant can only be claimed while the business is subject to restrictions. Employees must be off work for at least seven days.
• How to apply: Online through gov.uk

JOB RETENTION BONUS

• What it’s for: rewards companies for keeping furloughed staff on payroll.
• Credit type: grant
• Amount of payment: £1,000 per eligible employee
• When it’s available: 15 February 2021 to 31 March 2021
• Eligibility: Employees must have been furloughed and kept continuously employed until 31 January 2021. You must have made an eligible claim for employees through the Coronavirus Job Retention Scheme. Minimum income thresholds apply.
• How to apply: Online through gov.uk - https://www.gov.uk/guidance/check-if-you-can-claim-the-job-retention-bonus-from-15-february-2021

LOCAL RESTRICTIONS SUPPORT GRANT

• What it’s for: support for businesses legally required to close due to a nationally imposed local lockdown.
• Credit type: Grant
• Amount of grant: Depends on rateable value.
  • Rateable value up to £15,000: £667 for two weeks of closure.
  • Rateable value £15,000 to £51,000: £1,000 for two weeks of closure.
  • Rateable value over £51,000: £1,500 for two weeks of closure.
• Eligibility: Requires businesses to pay business rates and to be closed for two weeks. Businesses that don’t pay business rates may receive up to £1,500 at the discretion of their local council.
• How to apply: Visit local council website - or get more info here: https://www.gov.uk/guidance/check-if-youre-eligible-for-the-coronavirus-local-restrictions-support-grant

BUSINESS GRANTS

• What it’s for: support for businesses severely impacted by restrictions on socialising in high alert-level areas, including hospitality, accommodation and leisure.
• Credit type: Grant
• Amount of grant: Up to £2,100 per month.
  • Rateable value up to £15,000: £934 per month.
  • Rateable value £15,000 to £51,000: £1,400 per month.
  • Rateable value over £51,000: £2,100 per month.
• Eligibility: At local authority discretion.
• How to apply: Visit local council website - or get more info here: https://www.gov.uk/business-finance-support?types_of_support%5B%5D=grant

Can Credit Passport help?

If you are not getting anywhere with your own bank, we've teamed up with some amazing finance partners to help SMEs complete the process and prepare the paperwork to reach out to a wider market.

Check the links in the offers page on your Credit Passport dashboard.

If you don't have a Credit Passport account, join for free here.