From today, Monday 23rd March, businesses will be able to access government support to keep operating in the face of the coronavirus pandemic. Here, Andrew Diver, head of taxation at Beatons, examines the measures brought in to tackle the global economic emergency.
More than £330billion in loans and guarantees will be available for applications from the two schemes launching today. The government is delivering on its pledge to do whatever it can to help keep companies in business and manage cashflow during the coronavirus crisis.
Coronavirus Business Interruption Loan Scheme
This scheme will provide small and medium sized businesses, with a turnover of up to £45million, access to government-backed loans of up to £5m, with no interested charged for the first 12 months. The government will also provide lenders with a guarantee of 80% on each facility to give lenders further confidence in continuing to offer finance to SMEs.
To qualify, businesses must be based in the UK and meet the other British Business Bank eligibility criteria. The scheme is available through more than 40 accredited lenders which are listed on the British Business Bank website.
Covid Corporate Financing Facility
This will provide support for large sized firms. As part of the new facility, the Bank of England will buy short-term corporate debt from larger companies – a cost-effective way to raise working capital for companies. Particularly those which have faced disrupted cashflows, which will help pay wages and suppliers.
The Covid Corporate Financing Facility is open to firms that can prove they were in sound financial health before the impact of coronavirus was felt. Businesses who want to use the initiative do not need to have issued commercial paper previously.
Business support
The Government has also launched a new information campaign to ensure that businesses are aware of the support that is available. This is accessible via a new central website as well as media channels including radio, social media and TV to reach businesses eligible for help.
Chancellor Rishi Sunak said: “We are working around the clock to do whatever it takes to protect our people and businesses. That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”
We can help
The loan scheme and financing facility site alongside the deferral of VAT payments until the end of June and the Coronavirus Jobs Retention Scheme. A grant will be provided to employers to allow them to keep their works rather than make them redundant. Their salaries will be paid at a minimum of 80% of their current level up to a maximum of £2,5000.
These steps will help ensure that credit is available where it is needed and when it is needed to get businesses through this period of uncertainty. If you have any queries or would like more information, please get in touch with Beatons on 01473 659777.