This evening, the Chancellor has announced emergency measures following the continued crisis of confidence created by the coronavirus outbreak.

These measures come in the shape of a major extension to the grant scheme proposed in the budget last week and two major loan schemes designed to provide cash injections to hard hit businesses.

These schemes are described in more detail below:

Coronavirus ‘Bounce Back’ Loans

The government launched this new loan scheme with the aim of assisting cash strapped SMEs affected by the coronavirus outbreak.

The move, seen by many observers as a response to the bank’s general disinclination in respect of the Coronvaviurs Business Interruption Loan Scheme, has been warmly welcomed by the business community.

Applications for the so-called Bounce Back Loans for small and medium sized businesses opened on Monday 04 May at 9am.

Smaller businesses can apply for loans of between £2,000 and £50,000, with lending being fully backed by the government.

The loan amount claimable is capped at 25% of turnover and crucially the application process is a simple series of – seven – questions that business owners can complete in a matter of minutes.

Once the application is completed, a decision will be made promptly and funds released a few days after this point. 

Crucially, the loans are available fee and interest free for the first 12 months and are then convertible after this point.

We expect the loans to be converted over a period of five years after this fee and interest free period, with an expected rate of 2.5% interest above the base rate.

This represents both very fast access to much-needed cash funds and also very favourable lending terms in the medium-term as businesses affected by the outbreak recover.

The application is made via a network of well-known lenders – see more here – and most businesses will find the most success by approaching their existing bank.

If you have any questions regarding this scheme or if you need assistance making applications, please contact our team immediately.

Small Business Grant Scheme #1

This first grant scheme, originally proposed at £3,000 per business, and then extended to £10,000 and aimed at businesses that pay little or nothing in the way of business rates.

Such business will not pay any rates owing to one of the following measures: small business rate relief (SBRR), rural rate relief (RRR) and tapered relief.

It is important to note that almost all business premises incur business rates but most smaller businesses, with accordingly smaller premises, do not actually pay these rates owing to the aforementioned reliefs. 

Hence most businesses with premises – such as offices, retail stores, plants and workshops – will receive this funding.

The government have asked local authorities to process this and they aim to make contact with businesses within two weeks in order to progress a grant claim.

Small Business Grant Scheme #2

This new version of the scheme is aimed at helping businesses forced to close due to Covid-19 will also receive the following income via a business grant:

• For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
• For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
• For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two week

Coronavirus Business Interruption Loan Scheme

The treasury have devised a new loan scheme in collaboration with the Bank of England in order to provide an instant cash boost to businesses suffering due to the Coronavirus outbreak. 

The scheme has been administered by the British Business Bank and will aim to make available loans to business within weeks.

The loans are interest free for 12 months and will be guaranteed up to 80% by the government.

The loans are to be provided by 40 accredited providers, such as many high street banks and well-known financial firms. 

In addition to loans, the provider may also offer extended overdrafts, invoice finance and asset finance solutions as per the situation.

The scheme will helps SMEs with a turnover lower than £45-million per year.

This is very welcome news for businesses that have been affected by the outbreak and need an injection of cash in order to sure up working capital.

Ask Us For Help

 We are here to help and have set up a dedicated team to help you during this crisis. 

If you are considering using this scheme or have any questions regarding these measures, please email coronavirus@switchaccountants.co.uk and we will contact you to discuss your exact situation.