Coronavirus: business support

Published 02/07/2020   |   Last Updated 27/05/2021   |   Reading Time minutes

This article was last updated on 27 August 2020

Many businesses across Wales, the UK and the world will have already been affected by coronavirus, and can expect to feel the effects of the global pandemic for months to come.

Both the UK and Welsh Governments have announced a number of schemes to support businesses through this period. These include grants, business rate relief, support for the self-employed, and support for employers to pay their staff. This article outlines and summarises the help available from both governments.

We’ve also published blog posts today on coronavirus-related employment and benefits support.

Welsh Government support

Business grants

The Welsh Government launched two grants to support businesses that pay business rates.

All businesses that are eligible for Small Business Rate Relief (i.e. for properties with a rateable value of up to £12,000) will receive a grant of £10,000. The only limitation is that the same ratepayer may only receive the grant for a maximum of two properties in each local authority area.

Retail, hospitality and leisure businesses occupying properties with a rateable value of between £12,001 and £51,000 will receive a grant of £25,000. This includes businesses like shops, restaurants, cafés, pubs, hotels and live music venues.Local authorities are administering these grants and Business Wales has set up a webpage with links to the relevant section of each local authority’s website. Information that businesses need to access the grants should be available online, and the advice from Business Wales is not to call the local authority.

The Welsh Government has published guidance on the business rates grants. This highlights that local authorities have discretion over whether to award grants, and that these should be based on the overriding principle that the scheme provides support to businesses negatively impacted. In addition, as of 20 April, self-catering premises will need to meet the following criteria to qualify for a grant under this scheme:

  • The self-catering accommodation can produce two years of trading accounts directly preceding the current financial year of the business
  • The self-catering accommodation must actually have been let for a period of 140 days or more in the financial year 2019-20
  • The self-catering accommodation business must be the primary source of income for the owner (the minimum threshold is 50%)

The grant schemes closed to new applications on 30 June 2020.

Business rate relief

Retail, leisure and hospitality businesses with a rateable value of less than £500,000 will not have to pay any business rates in the 2020-21 financial year. Local authorities will be looking to automatically award this relief through the business rates system as soon as possible, and businesses will be sent a revised bill once this has been done.

The Welsh Government will write to all businesses in these sectors who have properties with a rateable value of £500,000 or more, and will consider discretionary support should there be a “compelling economic case” to do so.

The Welsh Government has published detailed guidance on the scheme, including eligibility criteria.

Economic Resilience Fund

The Economic Resilience Fund provides additional business support through two elements.

The Development Bank of Wales will provide loans of between £5,000 and £250,000 at favourable rates for businesses experiencing cash flow problems as a result of the pandemic. There will be a 12-month capital and interest repayment holiday, from payments, a 2% interest rate fixed for six years including the holiday, and no monitoring or arrangement fees. The Development Bank has published further details of the fund, eligibility and application process.

The loans offered by the Development Bank for Wales are now fully subscribed, with over 1,500 applications received in the first week of the scheme. The Welsh Government is now calling for the Chancellor of the Exchequer to provide additional funding to support businesses in Wales.

Additionally, current customers of the Development Bank will be offered a three-month capital and monitoring fee repayment holiday on existing loans, except for property development loans.

The Welsh Government has also established an ‘emergency pot’ to provide grant funding. This is primarily aimed at businesses, social enterprises and charitable organisations who would not qualify from previously announced support packages. Support is available for all sizes of business.

  • Microbusinesses employing 1 to 9 people will be able to apply for grants of up to £10,000, provided that they meet the criteria set out in the Welsh Government guidance;
  • Small and medium-sized businesses employing 10-249 people will be able to apply for grants of up to £100,000, provided that they meet the criteria set out in the Welsh Government guidance; and
  • Large businesses of critical economic and social importance to Wales will also be able to apply for funding. Applications will be considered on a case-by-case basis, to ensure that funding is allocated in a way that compliments other sources of support.

The latest round of the Fund closed for applications on 10 July 2020.

Start Up Grant

The Welsh Government has established a Start Up Grant of £2,500 for businesses set up between 1 April 2019 and 1 March 2020. This is open to businesses who have an annual turnover of less than £50,000, and have experienced a drop in income of more than 50% between April and June 2020. Additionally, in order to receive this grant businesses must not be in receipt of support from the Self-Employment Income Support Scheme, the Economic Resilience Fund or the Business Rates Grant. Further information on eligibility criteria is available in guidance published by the Welsh Government.

To apply for the grant, businesses should go through the eligibility checker for the Economic Resilience Fund and Start Up Grant on the Welsh Government’s website - the application form is accessible once the eligibility checks have been completed on the Business Wales website.

UK Government support

The UK Government launched a tool to help businesses across the UK find sources of coronavirus-related business support on 20 April. This covers both UK and Welsh Government funding schemes.

Coronavirus Business Interruption Loan Scheme

The UK Government launched the Coronavirus Business Interruption Loan Scheme to support primarily small and medium-sized businesses to access bank lending and overdrafts. It will be delivered by the British Business Bank

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 government covers the first 12 months of interest payments.

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 Scheme

The Coronavirus Large Business Interruption Loan Scheme launched on 20 April. This scheme provides a government guarantee of 80% to enable banks to make loans of up to £25 million to UK-based firms with an annual turnover of between £45 million and £250 million and of up to £50 million for businesses with a turnover above £250 million. These loans will be offered at commercial rates of interest.

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.

From 26 May, large businesses will be 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 will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. Businesses will be 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.

Bounce Back Loans

The Bounce Back Loans scheme launched for applications on 4 May.

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 before 4 November 2020.

Further information on the details of the scheme, and how to apply are 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.

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 are less than £50,000 (or 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 2019-20 tax year, and have submitted their 2018-19 tax return. The advice from UK Government is that if you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

The scheme also applies to members of partnerships. People who pay themselves a salary and dividends through their own company are not covered by the scheme, but may be able to access the Coronavirus Job Retention Scheme if they are paid via PAYE.

Grants will be paid in a single lump sum instalment covering all three months, and the process for applications is now open. Before making a claim, self-employed people should use HMRC’s eligibility checker to see if they are able to claim for this support.

If someone is eligible to claim, HMRC will give them a date they can make their claim from, and the online service is now up and running to do this. Once a claim has been received, HMRC will check it, and pay the grant into the claimant’s bank account within six working days.

On 29 May, the Chancellor announced that the scheme will be extended, so that those eligible will be able to claim a second and final grant in August. The grant will be worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant.

Applications for the second grant are now open for eligible applicants until 19 October 2020, where their business has been adversely affected by the pandemic on or after 14 July.

Coronavirus Job Retention Scheme

The UK Government’s Coronavirus Job Retention Scheme is designed “to support employers whose operations have been severely affected by coronavirus”.

The scheme is open to businesses, charities, and recruitment agencies in the UK that had created a PAYE payroll scheme on or before 19 March 2020, enrolled for PAYE online, and have a UK bank account. Public authorities are also eligible in some circumstances.

It allows employers to ‘furlough’ (i.e. put on a leave of absence) employees who were on the payroll on 19 March 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. Employees that were employed as of 28 February 2020 and on payroll and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer agrees to re-employ them and to put them on furlough.

From 1 July the scheme is only available to employers that have previously used the scheme in respect of employees they have previously furloughed. To reflect the changes to the furlough scheme, employers will no longer be able to submit claims for periods that overlap calendar months. They will also not be able to claim for a greater number of furloughed workers in a claim period than they have done previously.

Office holders (including company directors), salaried members of Limited Liability Parentships (LLPs), agency workers, and limb workers (dependent contractors) can be furloughed if they are paid via PAYE.

People who are ‘shielding because they are in a vulnerable group or need to stay home with someone who is shielding (and cannot work from home), or people with caring responsibilities can also be furloughed.

The scheme does not cover workers whose hours have been reduced.

The scheme will pay for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month (not including bonuses, fees or commission). Employers can top up the remaining 20%, or any amount in excess of the £2,500 limit, but they are not required to do this.

On 29 May, the Chancellor announced that from 1 July businesses will be able to bring back furloughed workers to work part-time. Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages while in work.

From August, the scheme will start to taper off, so that employers will start to pay a share of furloughed workers’ wages. In August, employers will pay employer National Insurance Contributions (NICs) and pension contributions. In September, as well as pension and employer NICs they will also pay 10% of wages, with the UK Government paying 70% up to a maximum of £2,187.50. In October, this will rise so that employers pay 20% of wages as well as NICs and pension contributions, with the UK Government paying 60% of wages up to a maximum of £1,875.

Employers can apply to the Coronavirus Job Retention Scheme through the UK Government’s website.

Job Retention Bonus

The Job Retention Bonus was announced in the Chancellor of the Exchequer’s Plan for Jobs. The UK Government will provide a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Further detail on the scheme will be available by the end of July, and payments will be made in February 2021.

Support for high-growth and innovative businesses

The UK Government has announced funding to support UK businesses driving innovation and development through the coronavirus pandemic. This will be delivered through two schemes, the Coronavirus Future Fund and targeted support for small and medium sized businesses focusing on research and development.

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 now open to applications until the end of September 2020. 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 innovation funding for small and medium-sized businesses will be delivered by Innovate UK, and the first payments will be made by mid-May. Virtually all of the funding will be used to accelerate grant and loan payments and increase support for existing Innovate UK customers, while the remainder will be offered to 1,200 firms not currently in receipt of Innovate UK funding.

Reclaiming Statutory Sick Pay

The UK Government will bring forward regulations using powers under section 39 of the Coronavirus Act 2020 to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to coronavirus. This refund will cover 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.

The scheme covers all types of employment contract, including full-time and part-time employees; employees on agency contracts; employees on flexible or zero-hours contracts; and employees on fixed-term contracts.

Employers can claim from the first qualifying day their employee is off work if the period of sickness started on or after:

  • 13 March 2020 - if the employee had coronavirus or the symptoms or is self-isolating because someone they live with has symptoms
  • 16 April 2020 - if the employee was shielding because of coronavirus
  • 28 May 2020 - if the employee has been notified by the NHS or public health bodies that they’ve come into contact with someone with coronavirus

Employers must have paid the employee’s sick pay before they can claim it back.

The online service for employers to reclaim Statutory Sick Pay for staff absences due to coronavirus is now available.

Other support available

The UK Government has also set out details of a number of other measures to support businesses through this period. These include:

  • 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;
  • The UK Government has deferred VAT payments for three months, so that businesses with a VAT bill due between 20 March and 30 June have the option to pay this at a later date, or alternatively pay as normal if they wish to do so;
  • Self-employed people who are due to make a self-assessment income tax payment by 31 July 2020 can defer this until 31 January 2021 if they wish to do so because their business has been impacted by coronavirus;
  • The deadline for businesses who are due to file their accounts between 26 March 2020 and 29 September 2020 has been extended to the earlier of30 September 2020, or 12 months from the end of the business’ accounting period. This extension will be applied automatically by Companies House, and firms do not need to apply for it.
  • Commercial tenants who cannot pay their rent will be protected from eviction until 30 September 2020. 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 30 September. Additionally, the Corporate Insolvency and Governance Act 2020, which came into force last month, 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 of the Exchequer’s Plan for Jobs set out details of a temporary reduction in VAT from 20% to 5% for hospitality, holiday accommodation and attractions. The temporary rate will apply between 15 July 2020 and 12 January 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.
  • Businesses can register for the UK Government’s Eat Out to Help Out scheme, which offers a discount of 50% up to a maximum of £10 per person, to diners for food or non-alcoholic drinks. The discount will be available on Mondays, Tuesdays and Wednesdays from 3-31 August 2020, and businesses will be able to claim the money back from the UK Government. Businesses can register with the UK Government to claim the discount if they sell food for immediate consumption on the premises, provide their own dine-in area or share one with another business, and were registered as a food business with their local authority by 7 July.

Article by Gareth Thomas, Senedd Research, Welsh Parliament

We’ve published a range of material on the coronavirus pandemic, including a post setting out the help and guidance available for people in Wales and a timeline of Welsh and UK governments’ response.

You can see all our coronavirus-related publications by clicking here. All are updated regularly.