COVID-19: Managing Business Finance, Tax, Rates and Insurance

What are the financial supports for my business during coronavirus?
What business loans are available for manufacturers impacted by Covid-19?

The government has launched a number of schemes to support businesses financially, this includes a temporary Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, to support businesses to access bank lending and overdrafts. Additionally, a Coronavirus Large Business Interruption Loan Scheme (CLBILS) has also been recently announced. Finally, HM Treasury and the Bank of England have jointly announced a Covid-19 Corporate Financing Facility (CCFF). Details of each scheme are provided below:

Coronavirus Business Interruption Loan Scheme (CIBLS)

  • The government will provide 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.
  • The government will not charge businesses or banks for this guarantee, and the scheme will support loans of up to £5m in value. The government will cover the first 12 months of interest payments and any lender-levied fees.
  • The borrower remains fully liable for the debt. However, under this scheme, personal guarantees of any form will not be taken for loans below £250,000

This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.

 

https://www.nibusinessinfo.co.uk/content/coronavirus-business-interruption-loan-scheme-revamped

 

Coronavirus Large Business Interruption Loan Scheme (CLIBLS)

  • The scheme will provide a government guarantee of 80% to enable banks to make loans of up to £25m for firms with turnover between £45m and £250m. Additionally, firms earning more than £250m will be able to apply for loans up to £50m. This facility is suitable for firms who do not qualify for the CIBLS or CCFF schemes.
  • The scheme will be delivered through commercial lenders and be offered at commercial rates of interest. Lenders are required to conduct their own credit risk checks.
  • The scheme will benefit businesses that were financially viable prior to the outbreak of COVID-19 but now face cash-flow difficulties as a result of the pandemic.

Eligibility requirements include the following:

  • A UK based entity
  • Annual turnover greater than £45m
  • Be unable to secure regular commercial finance
  • Have a borrowing proposal prepared, which the lender would consider viable if not for COVID-19 and believes the borrower will be able to trade out of any short/medium term difficulty.

Businesses from the following sectors are ineligible – banks/building societies, insurers/reinsurers, public-sector organisations (including schools)

This scheme will be launched later this month and the government expect it to be available via a range of accredited lenders.

 

Details can be accessed here

https://www.gov.uk/government/news/chancellor-expands-loan-scheme-for-large-businesses?utm_source=e1eae5d2-6726-4b01-a7b4-29c502d3659a&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

 

The Coronavirus Future Fund 

This scheme will issue convertible loans between £125,000 to £5 million to innovative companies which are facing financing difficulties due to the coronavirus outbreak.

The Future Fund will open to applications on Wednesday 20 May 2020.
The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.
These convertible loans may be a suitable option for businesses that typically rely on equity investment and are unable to access other government business support programmes because they are either pre-revenue or pre-profit.
The Future Fund was developed by the government and is being delivered by the British Business Bank.

Your business is eligible if:
-it is UK-incorporated. If your business is part of a corporate group, only the parent company is eligible
-it has raised at least £250,000 in equity investment from third-party investors in the last 5 years
-none of its shares are traded on a regulated market, multilateral trading facility or other listing venue
-it was incorporated on or before 31 December 2019
-at least one of the following is true:
-half or more employees are UK-based
-half or more revenues are from UK sales

How to apply
The Future Fund will open to applications on Wednesday 20 May 2020.

 

Covid-19 Corporate Finance Facility (CCFF)

  • This new facility means the Bank of England will buy short term debt from larger companies.
  • This facility will provide funding by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy.
  • The facility will be open to firms that can demonstrate they were in sound financial health prior to the COVID-19 shock (i.e. by having a short-term investment grade rating of A3/P3/F3/R3 or a long-term investment grade rating of BBB-/Baaa3/BBB-/BBB low or above by at least one of the major credit ratings agencies: S&P, Moody’s, Fitch or DBRS Morningstar).
  • The scheme will operate for at least 12 months.

Applications are now open and more info can be accessed here

https://www.nibusinessinfo.co.uk/content/coronavirus-covid-19-corporate-financing-facility-large-companies

A list of current accredited lenders can be accessed below

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/current-accredited-lenders-and-partners/

    Business Interuption Loan Scheme FAQ’s – View Here

    Business Interuption Loan Scheme Eligibility Checklist – View Here

    Business Interuption Loan Scheme How to Apply – View Here

    Business Interuption Loan Scheme Factsheet – View Here

     

     

    Are there finance options available from my bank?

    Manufacturing NI will try to keep you updated as each bank announces their own policies. The Bank of England has recently cut interest rates from 0.75% to 0.1% in addition to making billions of pounds available to banks across the UK to help small businesses during this crisis.  Some banks will agree to mortgage holidays for commercial and residential mortgages and consider new overdraft facilities. 

    Are Business Rates being adjusted to help businesses cope with the impact of Covid-19?

    Delay in rate Bills

    Rate bills for 2020-21 will not be issued until June 2020. Bills can be paid monthly instal-ments June 2020-March 2021. Monthly Direct Debit payment plans will be updated.
    Rate holiday for Businesses
    Three-month rates holiday for all business ratepayers, excluding public sector and utilities, shown as a 25% discount on the annual rate bill.

    Rural ATM rates relief

    The rural ATM scheme has been restored which will help to sustain cash flow in isolated ru-ral areas.

    Additional rates support

    • Industrial Derating – provides manufacturing businesses with a 70% reduction in rates
    • Non-Domestic Vacant Rating – rates are payable on vacant non-domestic properties at 50% of the normal level.

    The Northern Ireland Executive’s 2020-21 Budget has been published and includes several rates measures.
    -Rates reduction
    -The Regional Rate has been adjusted downward to offset the change in the total rateable value due to Reval2020. A further 12.5 per cent cut has now been made in the Budget.
    -This will effectively see an 18 per cent reduction on the 2019-20 figure. This is intended to benefit all business ratepayers and help with the economic recovery needed on the other side of the coronavirus pandemic.

    For more information on the rates reduction visit the NIBusinessInfo website
    https://www.nibusinessinfo.co.uk/content/coronavirus-ni-budget-2020-21-includes-further-rates-reduction

     

    What support for business is there for Statutory Sick Pay?

    At Budget 2020 the Chancellor announced details about a new coronavirus Statutory Sick Pay Rebate Scheme. This scheme will allow small and medium sized employers, with fewer than 250 employees, to apply to HMRC to recover the costs of paying Statutory Sick Pay to their employees. HMRC has published online guidance which includes information about who can use the scheme and the records employers must keep.

    To claim back statutory sick pay paid to employees due to coronavirus:
    https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-employees-due-to-coronavirus-covid-19

    The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers the current rate of SSP that they pay to current or former employees for periods of sickness starting on or after 13 March 2020. If you’re an employer who pays more than the current rate of SSP you can only claim the current rate amount.

    The repayment will cover up to two weeks starting from the first day of sickness if an employee is unable to work because they either:

    – Have coronavirus (COVID-19) symptoms;
    – Cannot work because they are self-isolating because someone they live with has symptoms; or
    – Are shielding and have a letter from the NHS or a GP telling them to stay at home for at least 12 weeks

    Employees do not have to give you a doctor’s fit note for you to make a claim.

    Who can use the scheme
    The scheme can be used by employers if they:
    • are claiming for an employee who’s eligible for sick pay due to coronavirus
    • had a PAYE payroll scheme that was created and started on or before 28 February 2020
    • had fewer than 250 employees on 28 February 2020

    The scheme covers all types of employment contracts, including:
    • full-time employees
    • part-time employees
    • employees on agency contracts
    • employees on flexible or zero-hour contracts
    We will let you know when the scheme will end.

    Records you must keep
    You must keep records of all the statutory sick payments that you want to claim from HMRC, including:
    • the reason why an employee could not work
    • details of each period when an employee could not work, including start and end dates
    • details of the SSP qualifying days when an employee could not work
    • National Insurance numbers of all employees who you have paid SSP to
    You’ll have to keep these records for at least three years following your claim.

     

    For more guidance, please click below

    https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-employees-due-to-coronavirus-covid-19

     

     

     

     

     

     

    Are there any direct funding OR grants available for manufacturers for 2020-21 to mitigate the impact of Covid-19?

    This was not previously available to manufacturers.  However, following extensive lobbying on your behalf, there is now a £10,000 grant available to Northern Ireland manufacturers with a Total Net Annual Value of £15,000 and below, who currently benefit from Industrial Derating.

    Eligibility criteria:
    Businesses with a Total Net Annual Value of £15,000 and below, who currently benefit from Industrial Derating, are  eligible for the £10,000 grant.

    We will continue to press for support for the many SME manufacturers who fall outside this.

    Additional information:
    -Vacant properties are not eligible for this grant
    -Businesses with 3 or less premises will only be eligible for one grant of £10,000 in total
    -For rental properties, the scheme is being designed to benefit the small businesses and not the landlord who is responsible for paying the rates. For this reason, no grant payments are being automatically issued to landlords of properties with a Total Net Annual Value of £1,590 or less.

    Landlords, managing agents and small businesses in this situation should not use the Small Business Grant Support online form to register for the scheme but should wait until a new online form for rental properties is made available.
    The deadline to register for this grant scheme is Wednesday 20 May 2020.

    To access this visit The Department for the Economy website.
    https://www.covid-19smallbusinessgrants.economy-ni.gov.uk/RentalPropertiesandNAVBelow1590

    The deadline to register for this grant scheme is Wednesday 20 May 2020

    https://www.nibusinessinfo.co.uk/sites/default/files/Coronavirus-£10000-Small-Business-Support-Grant-FAQs-V1.3_11May2020.pdf

    NI Micro-business Hardship Fund

    The NI Executive has launched a new NI Micro-business Hardship Fund to help Northern Ireland based micro-businesses and social enterprises unable to access other regional and national COVID-19 support measures.

    Department for the Economy (DfE) will make up to £40 million available through a fund, which is being administered by Invest Northern Ireland on behalf of the Department for the Economy. It will offer emergency funding to businesses facing immediate cash flow difficulties due to the impact of COVID-19.

    Summary of the scheme
    The Minister for the Economy announced on 15 May 2020 that the scheme would open for online applications within the next seven days. An online eligibility checker will be available week commencing 18 May 2020.

    Only one grant will be paid to each eligible business, irrespective of how many properties the business occupies.

    Eligibility:  Who is eligible
    Businesses should ensure they meet the following criteria before applying to the fund:
    -The business must be based in Northern Ireland.
    -At 29 February 2020, the business must have employed between one and nine employees paid via PAYE except where the sole employee is the business owner or company director. The number of employees will be based on headcount.
    -Since 1 March 2020, the business must have experienced a reduction in turnover in excess of 40% as a direct result of the COVID-19 pandemic or associated Government restrictions.

    Who cannot apply
    The NI Micro-business Hardship Fund is open to all micro-business and social enterprises excluding the following:
    -Primary agricultural producers i.e. those primarily concerned with crop or animal production or forestry or logging or fisheries or aquaculture. However, agricultural businesses associated with the processing, marketing and retail of agricultural products can apply to the fund.
    -Businesses eligible for the following NI Executive schemes:
           -£10,000 Small Business Support Grant Scheme
           -£10,000 Small Business Grant for rental properties and Total NAV of £1,590 or below
           -£25,000 Retail, Hospitality, Tourism and Leisure Grant
           -COVID-19 Childcare Support Scheme
    -Charities or social enterprises with charitable status.
    -Social enterprises that receive less than 60% of revenue from trade in goods and/or services.

    Businesses should note that other non-repayable Government grants related to COVID-19 will be taken into account and will be deducted, where applicable, from the final grant awarded.

    For more info:

    https://www.nibusinessinfo.co.uk/content/coronavirus-get-ready-apply-ni-micro-business-hardship-fund

     

     

    Are Industrial de-rated properties eligible for the cash grant?

    As outlined in the previous answer, following extensive lobbying on your behalf, there is now a £10,000 grant available to Northern Ireland manufacturers with a Total Net Annual Value of £15,000 and below, who currently benefit from Industrial Derating.

    If you have not yet registered for the scheme and you think you are be eligible, you should now register for the scheme and provide your bank details using the online form at www.nibusinessinfo.co.uk/content/coronavirus-business-support-grant-schemes

    https://www.nibusinessinfo.co.uk/sites/default/files/Coronavirus-£10000-Small-Business-Support-Grant-FAQs-V1.3_11May2020.pdf

    The deadline to register for this grant scheme is Wednesday 20 May 2020.

    To access this visit The Department for the Economy website.
    https://www.covid-19smallbusinessgrants.economy-ni.gov.uk/RentalPropertiesandNAVBelow1590

     

    What if my business has outstanding tax liabilities that I may not be able to pay in due time because of Covid-19 related business disruption?

    The government is setting out measures that will seek to enable those businesses and self-employed individuals with outstanding tax liabilities to receive support with their tax affairs:

    • HMRC has set up a dedicated COVID-19 helpline (0800 0159 559) to help those in need, and they may be able to agree a bespoke Time to Pay arrangements.
    • Time to Pay arrangements were previously used in response to flooding and the financial crisis, giving businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.
    • To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms when needed.
    HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.

    The government will be automatically deferring business payments for Valued Added Tax (VAT).
    The deferral will apply from 20 March 2020 until 30 June 2020.

    For more information
    https://www.nibusinessinfo.co.uk/content/coronavirus-deferred-income-tax-payments
    https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19

     

    Can I claim on my company’s insurance for any disruption and/or loss of earnings as a result of Covid-19?

    We understand that some companies have been told by their insurance companies that they have a list of diseases for which they will pay out insurance, with some companies not adding Covid-19 to this list.

    We are seeking clarification with Government on this issue.

     

    Trade Credit Insurance cover due to Coronavirus

    Following lobbying on your behalf, the government has now agreed to temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market. This will support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on payment.

    For more info:

    https://www.gov.uk/government/news/government-to-support-businesses-through-trade-credit-insurance-guarantee

    or contact:

    Nigel Birney
    Head of Trade Credit Northern Ireland
    Willis Towers Watson
    Willis Towers Watson Trade Credit and Surety Ltd
    Floor 3 , Centrepoint , 24 Ormeau Avenue,
    Belfast
    BT2 8HS

    D +44 (0)28 90895237
    M +44 (0)7917 107441

    nigel.birney@willistowerswatson.com
    www.tradecreditsurety.com

    Is there a helpline that I can call for Government Support?

    If you are an Invest NI Client you can speak to your Invest NI Client Executive who can guide you. 

    The Invest Northern Ireland phone number is 0800 181 4422 and lines are open Monday to Friday, 8.30am – 5pm.

    Can I delay my tax payments as a result of COVID-19?

    • HMRC has set up a dedicated COVID-19 helpline (0800 0159 559) to help those in need, and they may be able to agree a bespoke Time to Pay arrangements.
    • Time to Pay arrangements were previously used in response to flooding and the financial crisis, giving businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.
    • To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms when needed.
    HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.

    The government will be automatically deferring business payments for Valued Added Tax (VAT).
    The deferral will apply from 20 March 2020 until 30 June 2020.

    For more information
    https://www.nibusinessinfo.co.uk/content/coronavirus-deferred-income-tax-payments
    https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19

    What can I do to preserve my Working Capital/ Cash management?

    Covid-19 related business disruption is highly likely to cause significant strain on cash generation and conversion.

    Organisations will need to preserve and drive out cash flows, optimise working capital and enhance visibility over the level and timing of funding requirements.

    This will involve developing and refining robust cash flows models and implementing rapid operational improvements, such as:

    • Analysing immediate and near-term funding requirements
    • Stabilising cash flow and buying time for negotiation with stakeholders
    • Driving improvements in cash collection
    • Prioritising cash outflows
    • Identifying cash generation opportunities
    • Reviewing working capital cycles and reducing the working capital requirements of the business