With coronavirus affecting many firms in international trade, the Daily Update brings you an updated (Tuesday, 28 April, 1pm) list of government schemes to help with paying wages and managing cash flow.
UPDATE: Yesterday (Monday, 27 April) Chancellor Rishi Sunak announced small businesses will be offered 100% government-backed loans of up to £50,000.
WHAT: The “bounce-back loans” will provide easier access to cash for small companies that had been struggling to access existing government-backed lending schemes. Small businesses can apply for loans of up to 25% of their turnover, up to £50,000.
Borrowers will not have to pay any fees and interest for the first 12 months of the loan, with no repayments due for the first 12 months.
The government has been urged to increase this guarantee after reports small businesses were experiencing too many financial hurdles when applying for CBILS (see below).
HOW: The Chancellor said firms will be able to apply for the new loans from high-street banks as early as next Monday, 4 May. You can find more information here.
Coronavirus Business Interruption Loan Scheme (CBILS)
WHAT: Under CBILS, SMEs with up to £45m turnover and considered ‘viable businesses’ can access one-year interest free loans from a group of 40 lenders managed by the British Business Bank. This scheme had to be overhauled after complaints about difficulty of accessing the loans.
The government guarantees 80% of this loan to give banks the confidence to lend.
HOW: Apply for a CBILS loan here.
Help for start ups
UPDATE: The government launched a £1.25bn support package on 20 April for venture-capital backed businesses that are “driving innovation”, ranging from the tech to life sciences sectors.
The government is partnering with the private sector to launch a £500m co-investment fund for high-growth companies impacted by the COVID-19 crisis. Money put up by private investors of between £125,000 and £5m will be matched by state-backed loans that can covert into equity.
SMEs focusing on research and development will also benefit from a £750m pot of grants and loans.
HOW: The scheme will be launched in May – you can find more information here.
Furlough wages payment
UPDATE: The government’s scheme to help companies pay for staff they have had to put on temporary leave or ‘furlough’ has been open for over a week. Known as the Coronavirus Job Retention Scheme (CJRS), it launched earlier than the end-of-April due date. The government says its system can process up to 450,000 claims an hour.
Employers can claim for 80% of their employees’ wages plus any employer National Insurance and pension contributions, but there are criteria to satisfy.
HOW: Find out if your firm is eligible to claim for wages for employees on temporary leave (‘furlough’) here.
UPDATE: 140,000 firms applied for the scheme on its first day (Monday, 20 April) and seven out of 10 UK firms have furloughed staff, The Guardian reports.
Loans for larger businesses
Initially for SMEs with annual turnovers of under £45m, CBILS has now been extended to the so-called ‘squeezed middle’ of firms in the £45m-250m turnover range.
Businesses with turnover in this bracket were then allowed to apply for government-backed loans of up to £25m.
UPDATE: Now firms with more than £250m can apply to borrow up to £50m from lenders.
HOW: Apply for a CBILS loan here.