Edited 12th November 2020: This post was originally my view of the government support for UK SMEs tackling coronavirus disruption that was announced on 24th September, but since then it’s been changed so what’s the situation now? Read on to find out more:
Furlough is back!
The confusing Job Support Scheme that was due to start on 1st November has been shelved. Businesses are now able to continue flexibly furloughing staff until March 2021.
The scheme will cover up to 80% of normal wages (up to £2,500) for any time that employees are not working. It’s now an option for all employees as of 30/10/20 so it also covers anyone who wasn’t in the original scheme. Staff who are shielding and can’t work from home are able to be furloughed.
A good resource for finding out more is this guide discussing the support for UK SMEs tackling coronavirus disruption.
Business Interruption Loans
The deadlines for applications to both the Coronavirus Business Interruption Loan scheme (CBILS) and the Bounce Back Loan scheme have been extended to 31st January 2021 and repayments for both loans have been made more flexible.
CBILS loans (<£50,000) can potentially be extended for up to 10 years (an increase on the previous 6 year term) with the lenders agreement. Bounce Back Loans (25% of turnover up to £50,000) can also be extended to 10 years. This will almost half the monthly repayments.
Furthermore with Bounce Back loans there are opportunities for payment holidays or make interest only repayments after 6 repayments have been made.
The Bounce Back Loan application is automated and easy to complete, the CBILS loan application process is more arduous; find advice on what is required here.
Originally the loan schemes were only open for one application per business. As of November this has been amended so that another application can be made to access any loan that wasn’t used first time around, up to the same cap of £50,000 or 25% of turnover. This is designed to help ease cashflow for businesses who are affected by the second lockdown.
If you deferred a VAT payment that was due between April and June 2020 it had been expected that this would need to be paid over by the end of March 2021 at the latest. Now however the Chancellor has extended this deadline so that repayment can be spread over the 2021/22 fiscal year in up to 11 monthly instalments.
The best tool for tackling any sort of business uncertainty is a cashflow forecast. That’s certainly true of the continuing Covid-19 disruption; you can download my revised Coronavirus Cashflow Checklist here, and you may like to check out this blog about why a cashflow forecast is particularly important now.