As the situation with Covid-19 continues, many businesses are considering or availing of financial guidance and support from the government, as well as from the banking and finance industry.
In Northern Ireland, a number of business initiatives are in place which, for the greater part, mirror most of the other UK schemes.
There are 3 major loan schemes available, with eligibility based upon the size of your business:
1. Coronavirus Business Interruption Loan Scheme (CBILS)
Targeted at SMEs, the CBILS provides lenders with a government-backed guarantee of 80% on losses that may arise on facilities of up to £5 million.
The CBILS scheme is now being expanded and will be available to viable businesses impacted by Covid-19, even if the lender would be prepared to offer the applicant a facility without the benefit of the CBILS.
Lenders may require security for the facility, although personal guarantees will not be considered where the facility is for less than £250,000.
For facilities above £250,000, security is required, but personal guarantees remain at the discretion of the lender. CBILS is offered for up to 6 years, with the first year interest free.
2. Coronavirus Large Business Interruption Loan Scheme (CLBILS)
Targeted at businesses with turnover above £45 million, the CLBILS is designed to support businesses trading successfully before Covid-19 but which may now experience lost or deferred revenues, or disruptions to their cashflow.
The scheme covers all business sectors, and offers loans of up to £25m, which are backed by an 80% guarantee from the government. For those companies with an annual turnover that exceeds £250 million, loans of up to £50 million will be available.
The government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied charges.
3. Bounce Back Loan Scheme
This is an alternative to the Coronavirus Business Interruption Loan Scheme for UK-based SMEs that were not “an undertaking in difficulty” on 31st December 2019.
This Scheme allows SMEs to borrow between £20,000 and £50,000. Businesses can apply for a loan for 25% of their turnover up to the maximum of £50,000. The loans have a 100% guarantee from the government and there is no interest or fees to pay for the first 12 months.
The term of the loans are 6 years and businesses do not need to make repayments for the first 12 months. The interest rate for the loan is set at 2.5%.
Coronavirus Job Retention Scheme
This Scheme has been broadly welcomed by businesses as an alternative to staff redundancy. To date, it has cost the chancellor approximately £8 billion.
Although very rule-heavy, it has proved to be easy to administer. The Coronavirus Job Retention Scheme is a temporary scheme which will run from 1st March until 31st October 2020.
It has been backdated to cover those employees who have already been made redundant who can now be reinstated and put on furlough leave.
The Scheme is open to all UK employers who:
- have a payroll scheme in place on or before 19th March 2020
- have a UK bank account
Employers will be able to claim 80% of furloughed employees’ basic gross monthly salary up to a maximum of £2,500 per month, plus the associated Employer National Insurance contributions and the minimum automatic enrolment pension contributions on that salary.
The calculation should be based on the employee’s last pay period prior to 19th March 2020 and should not include fees, commissions and bonuses.
Employees must be furloughed for a minimum of 3 weeks.
For employees whose pay varies, employers can claim either:
the higher of the same month’s earnings from the previous year
their average monthly earnings from the 2019/20 tax year
or their average monthly earnings if employed for less than a year.
If paying 80% of their wage brings an individual below the National Living or National Minimum Wage (NLW/NMW), there is no requirement for the Company to make up the difference as the NLW and NMW are only payable for hours actually worked.
It is the employer’s choice as to whether they make up the difference in the salary. Employers must agree with and then write to their staff confirming they have been furloughed.
£25,000 Retail and Hospitality Grant Scheme
This is designed for businesses in the retail, hospitality and leisure sector – such as pubs, clubs, restaurants, hotels, guest and boarding accommodation, cinemas, and live music venues.
To be eligible you need to have a total Net Annual Value between £15,001 and £51,000.
£10,000 Small Business Support Grant Scheme
Available for businesses in Northern Ireland with a net rateable value under £15,000 who currently benefit from Industrial Derating, this scheme gives them a one-off grant of £10,000 to cover ongoing business costs in light of the coronavirus and its impact on your company.
The deadline to register for this grant scheme is Wednesday 20th May 2020. The grant can be used to cover ongoing business costs in light of the coronavirus and its impact on your company.
Deferred payment schemes
This is a big cashflow advantage for businesses, allowing them to defer payment of VAT if it was due between 20th March to 30th June 2020, and the liability is not payable until the end of the 2020/21 tax year.
Any VAT refunds and reclaims, however, will be paid by the government as usual.
HMRC Time to Pay
Another scheme to defer payment for businesses in financial distress.
You can avail of this by calling the HMRC on their helpline 0800 0159 559 and explain to them when you will be able to meet your obligations. They will consider deferred payment terms on a case by case basis.
Other local incentives
Business Rates Holiday
In Northern Ireland, this holiday is for 3 months: April, May and June 2020. Ratepayers do not need to request to have their rate bill deferred until June 2020.
This will happen automatically. This reduces the 2020-21 annual rate bill for business ratepayers by 25% and does not need to be paid back.
If you need more information on business supports in Northern Ireland during and beyond the Coronavirus lockdown, visit NIDirect.gov.uk.