Coronavirus: Business support autumn 2020

Published 13/01/2021   |   Last Updated 13/01/2021   |   Reading Time minutes

Businesses and workers have faced considerable impacts since the start of the coronavirus pandemic, and the Welsh and UK governments have developed a range of measures to assist them.

This article outlines the support currently available for businesses from the Welsh and UK governments. We’ve also updated our article on support available through the benefits system.

Welsh Government support

Economic Resilience Fund

The Welsh Government has announced a number of schemes to support businesses in the hospitality, tourism, non-essential retail and leisure sectors that are affected by the pre and post-Christmas restrictions, as well as businesses in their supply chain. 

ERF Restrictions Business Fund

The ERF Restrictions Business Fund provides support for businesses who pay business rates. It provides the following support:

  • Businesses in the hospitality and non-essential retail sectors that are in receipt of Small Business rate relief (SBRR) and have a rateable value of £12,000 or less are eligible for a £3,000 payment. Tourism, leisure and supply chain business qualifying for SBRR will also be eligible for this support if they have greater than 40% reduction in turnover during the restriction period.
  • Hospitality and non-essential retail businesses with a rateable value of between £12,001 and £51,000 are eligible for a £5,000 payment if they are forced to close. Tourism, leisure and supply chain business in the same rateable value bracket will also be eligible for this support if they have greater than 40% reduction in turnover during the restriction period.
  • Hospitality and non-essential retail businesses with a rateable value between £51,001 and £150,000 are eligible for a £5,000 payment if impacted by the restrictions. Tourism, leisure and supply chain businesses in the same rateable value bracket will also be eligible for this support if they have greater than 40% reduction in turnover during the restriction period.

Hospitality businesses who received the Lockdown Business Grant in October via their Local Authority and non-essential retail businesses that were previously registered under the firebreak will begin receiving payments into their bank account during December. These businesses are not required to re-register their details to apply for this funding. All other businesses will need to register their details and complete a short on-line application, with the registration process opening in January 2021 and payment being made as soon as possible.

ERF Restrictions Discretionary Grant

Local authorities will continue to deliver the Lockdown Discretionary Grant to hospitality, tourism and supply chain businesses that are materially impacted by the restrictions.  This will provide support of up to £2,000 to sub VAT sole traders without a property who see a reduction of more than 40% reduction in turnover as a result of the restrictions such as cleaners providing services to the hospitality industry and taxi drivers.  These grants are for businesses who do not pay business rates, have up to 50 employees, and where the business is the main source of the applicant’s income.

Applications will be dealt with by local authorities on a first-come-first-served basis, and eligible businesses should apply for this grant via their local authority website.

ERF Sector Specific Support

The Welsh Government has made £180 million of funding available under the ERF Sector Specific Support scheme.

Under this scheme, eligible businesses in the hospitality, tourism and leisure sectors and their supply chains can receive the following support:

  • A minimum grant of £2,500 for a single employee business.
  • Small and medium-sized enterprises with up to 249 employees can receive £1,500 per employee up to a maximum of 10 employees. For those employing more than 10 employees, they will receive the lower of £1,500 per employee or self-declared operating costs for the restricted period. The maximum grant available is £100,000.
  • Large businesses with 250+ employees who are headquartered in Wales can receive £500 per employee up to a maximum grant of £150,000, and support will be determined on a case-by-case basis.

Businesses need to employ staff via PAYE, and be VAT-registered or exempt from VAT with turnover above £85,000, or a limited company with turnover above £50,000. They will need to show that turnover has been reduced by more than 60% in comparison to the equivalent period last year (4 December – 15 January), or a 6 week period in the current financial year if the businesses started trading after 4 December 2019.

The fund opened for applications on 13 January, and further guidance is available on the Business Wales website.

Employer incentives for apprenticeships

The Welsh Government has launched a number of incentives to support employers to recruit apprentices. These apply from 1 August 2020 until 28 February 2021, and include:

  • £3,000 for each new apprentice aged under 25 recruited, where the employment contract is for at least 30 hours per week;
  • £1,500 for each new apprentice aged under 25 recruited, where the employment contract is for less than 30 hours per week;
  • £2,000 for each new apprentice aged 25 and over recruited, where the employment contract is for at least 30 hours per week; and
  • £1,000 for each new apprentice aged 25 and over recruited, where the employment contract is for less than 30 hours per week

These incentives apply to apprenticeships delivered at levels 2-5, and payments will be limited to a maximum of 10 apprentices per employer.

For apprentices of all ages who are made redundant between 23 March 2020 and 28 February 2021, the following incentives apply to employers who re-employ the apprentice to allow them to complete their training:

  • £2,600 where the employment contract is for at least 30 hours per week; and
  • £1,300 where the employment contract is for less than 30 hours per week

The apprentice must continue to follow the same Apprenticeship Framework Pathway, and the incentives apply to apprenticeships delivered at levels 2-5.

In addition to these payments, businesses who employ a disabled person as an apprentice can claim an extra £1,500 for each new apprentice recruited. These payments apply to apprentices of all ages, and are in addition to all of the incentives for apprentices aged 16-24, 25+ and those who have been made redundant. The incentives apply to apprenticeships delivered at Levels 2-5.

The Welsh Government has also launched an Apprenticeship Vacancy Service, where employers can advertise any future apprenticeship opportunities.

Barriers Grant

The Welsh Government has established the Barriers Grant to provide grants to unemployed people who face greater economic barriers to setting up their own business. This will help 600 individuals into self-employment, or to start up their own business, and will offer grants of up to £2,000 to individuals to contribute towards the essential costs of setting up a business.

The grant will be open to all unemployed people, however priority in allocating funding will be given to groups most affected by the pandemic, such as women, people from Black, Asian and Minority Ethnic backgrounds, disabled people, and young people.

The fund will open for applications on 1 December, and guidance is available. Completed applications should be e-mailed to barriersgrant@businesswales.org.uk.

UK Government support

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (furlough) allows employers to ‘furlough’ (i.e. put on a leave of absence) employees that cannot work for a number of reasons including because the business has been forced to close, or because there is no work to do, as a result of coronavirus. It has been extended across the UK until 30 April 2021 and the Job Support Scheme has been postponed.

The new scheme will support workers who were on the payroll on or before 30 October 2020, and will allow firms to furlough workers for at least 7 consecutive calendar days. Employers will be able to rehire and furlough workers who were employed and on the payroll as of 23 September 2020, but have since been made redundant.

Flexible furloughing, where the employee works some of their hours, is permitted, as is full-time furloughing. The UK Government will pay 80% of a worker’s usual wages for hours not worked, up to a maximum of £2,500 per month, and this will apply until the end of April 2021. Employers will be required to pay employer National Insurance and pension contributions for hours not worked, and all wage costs for hours worked.  Claims can be made online. Claims should be made by day 14 of the following month.

Self-Employment Income Support Scheme

The UK Government’s Self-Employment Income Support Scheme allows self-employed people whose income has been negatively affected by coronavirus to claim a taxable cash grant.

It is available to people whose annual trading profits were less than £50,000 in 2018-19 (or whose annual trading profits averaged less than £50,000 a year in the period 2016-17, 2017-18 and 2018-19), and where more than half of their income comes from self-employment. It is only available to people who traded in the 2018-19 and 2019-20 tax years, have submitted their 2018-19 tax return, and who are continuing to trade but are still being affected by the pandemic.

Before making a claim, self-employed people should use HMRC’s eligibility checker to see if they are able to claim for this support.

The Chancellor has recently announced that two further rounds of the grant will be opened from November 2020 to April 2021, for businesses who continue to be affected by the pandemic. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. Following the increase announced in the grant available, this grant will now cover 80% of average monthly trading profits between November and January, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total. Businesses can claim for this grant online until 29 January 2021.

The second grant will cover a three-month period from the start of February until the end of April, and the UK Government will review the level of this grant and make a further announcement on this.

Kickstart Scheme

The Kickstart Scheme provides funding to create new job placements for 16 to 24 year olds on Universal Credit who are at risk of long term unemployment. Employers can apply for funding to cover:

  • 100% of the National Minimum Wage or the National Living Wage, depending on the age of the participant, for 25 hours per week for a total of 6 months;
  • associated employer National Insurance contributions; and
  • employer minimum automatic enrolment workplace pension scheme contributions.

Additional funding of £1,500 per job placement is provided to support young people to build their experience and help them move into sustained employment after they have completed their Kickstart funded job.

Employers can spread the start date of the job placements up until the end of December 2021.

The Department of Work and Pensions will refer suitable candidates to job placements, and then the employer will interview and recruit to the roles.

A Kickstart Scheme application must be for a minimum of 30 job placements. If a single employer cannot provide this many job placements, they can find an existing Kickstart gateway, such as a local authority, charity or trade body who will apply on behalf of the employer.

The scheme opened for employer applications on 2 September. There is guidance available for employers who want to create 30+ jobs; employers who want to create up to 29 jobs; for gateways who help smaller employers apply for the scheme; and for young people.

Bounce Back Loans

The closing date for applications for the Bounce Back Loans scheme has recently been extended to 31 March 2021.  The Chancellor has also announced that businesses who have received a loan that is less than 25% of their annual turnover can ‘top-up’ their existing loan.

This scheme supports SMEs to borrow between £2,000 and £50,000. The UK Government guarantees 100% of the loan and there are no fees or interest to pay for the first 12 months. UK businesses negatively affected by coronavirus will be able to apply for the scheme, providing their business was not in difficulty on 31 December 2019. However, businesses who have received a loan through the Coronavirus Business Interruption Loan Scheme cannot apply, although if they have received a loan of below £50,000 under this scheme they will be able to transfer it into the Bounce Back Loans scheme by arranging this with their lender.

Under the Pay as You Grow option recently announced by the Chancellor, recipients of Bounce Back Loans are given the option to repay their loan over a period of up to ten years, which reduces monthly repayments by almost half. Businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).

Further information on the details of the scheme, and how to apply, is available on the British Business Bank’s website. The application process is online, with seven questions, and the UK Government intends that funding will be available for businesses within days of applying.

Coronavirus Business Interruption Loans Scheme

The UK Government launched the Coronavirus Business Interruption Loan Scheme to support primarily SMEs to access bank lending and overdrafts. It is delivered by the British Business Bank, and the closing date for applications has recently been extended to 31 March 2021.

The UK Government provides lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. It will not charge businesses or banks for this guarantee, and the Scheme supports loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as the UK Government covers the first 12 months of interest payments. The Chancellor has recently announced that lenders will be able to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.

UK-based businesses with an annual turnover of up to £45 million can access the scheme, and the British Business Bank has published eligibility criteria and Frequently Asked Questions.

Coronavirus Large Business Interruption Loans Scheme

The Coronavirus Large Business Interruption Loan Scheme launched on 20 April, and the Chancellor has recently announced that the closing date for applications has been extended to 31 March 2021. This scheme provides a government guarantee of 80% to enable banks to make loans to larger businesses. These loans are offered at commercial rates of interest. 

The scheme provides loans of up to £25 million to UK-based firms with an annual turnover of between £45 million and £250 million.

From 26 May, large businesses with annual turnover of above £250 million have been able to borrow up to 25% of turnover, to a maximum of £200 million, through the scheme. However, if they wish to borrow more than £50 million then businesses are subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. Businesses are unable to pay bonuses or award pay rises to senior management, unless they were already declared, are similar to payments made over the past 12 months, and do not materially affect the business’s ability to repay the loan.

Further information on eligibility criteria and how the scheme operates is available on the British Business Bank’s website, who have also published a guide for businesses on the scheme and a Frequently Asked Questions document, which include further information about the scheme and how to apply for it.

Coronavirus Future Fund

The Coronavirus Future Fund is being delivered by the British Business Bank, and provides loans of between £125,000 and £5 million to innovative companies across the UK which are facing financing difficulties due to the coronavirus outbreak. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.

The fund is open to UK-based businesses who can attract equivalent match funding from third-party private investors and institutions, and have previously raised at least £250,000 in equity investment from third-party investors in the last 5 years. There is no cap on how much private investors can loan the company.

The fund is investor-led, meaning that a lead investor registers online to start the application process. The British Business Bank has published an eligibility checker, information for companies, and information for investors.

The Chancellor has recently announced that the closing date for applications has been extended to 31 January 2021.

Other support

The Welsh and UK governments have also set out details of a number of other measures to support businesses through this period. These include:

  • SMEs can reclaim Statutory Sick Pay (SSP) paid for sickness absence due to coronavirus via an online service. This refund covers up to 2 weeks’ SSP per eligible employee who has been off work because of coronavirus, and will be open to businesses who employed less than 250 people as at 28 February 2020. Employers can claim from the first qualifying day their employee is off work, and must have paid the employee’s sick pay before they claim it back.
  • The Welsh Government has announced that commercial tenants who cannot pay their rent will be protected from eviction until 31 March 2021. While commercial tenants will still be liable for the rent, the measures introduced will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until the end of March 2021.
  • The Corporate Insolvency and Governance Act 2020 temporarily suspends parts of insolvency law through introducing a moratorium of 20 business days for business directors to consider rescue options through filing for or applying to court for a moratorium. The moratorium can be extended for a further 20 business days without creditor consent, or for a longer period with creditor consent, by filing relevant statements with the court. The UK Government’s guidance sets out more details.
  • The Chancellor recently announced that the UK Government would extend the temporary 5% rate of VAT for hospitality and tourism until 31 March 2021. The UK Government has published general guidance on how the temporary reduction will operate, as well as more detailed documents covering hospitality, holiday accommodation and attractions.
  • The Chancellor recently announced that the UK Government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. All businesses which deferred VAT will be able to opt-in to the New Payment Scheme from early 2021.
  • The UK Government will give the self-employed and other taxpayers with income tax liabilities of up to £30,000 the option of using HM Revenue and Customs’ Time to Pay facility to agree a plan to pay taxes due in January 2021 over an additional 12 months.
  • Businesses who are concerned they may not be able to pay their next tax bill may be eligible to receive support via HM Revenue and Customs’ Time to Pay helpline 0800 024 1222. Arrangements are agreed on a case-by-case basis depending on individual circumstances.

Article by Gareth Thomas, Senedd Research, Welsh Parliament