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Updated: 19 October 2021
Update 17/12/20:
The Chancellor has announced an extension to the furlough scheme, with the scheme now due to end on 30th April 2021. His Winter Economy Plan, announced on the 24th September, was then updated on the 22nd October to include further grants for the self-employed, extensions to the Government’s coronavirus loan schemes, business grants, as well as tax deferrals and a new Jobs Support Scheme. Here, we take a look at the most recent announcements and what this means for small businesses in the UK.
In order to help self-employed professionals through the winter months, the Chancellor unveiled the Self-Employed Income Support Grant (SEISS). This grant is only available to those professionals who have:
It offers 40% of average monthly trading profits, paid in a single instalment, and covers 3 months’ profits for November 2020 through to January 2021. The grant is capped at £3,750. Though the date for businesses to apply has not been announced yet, we will update this article once this information becomes available.
In addition, there will be a fourth grant for self-employed professionals to cover February 2021 to April 2021. The Government will confirm the details of this in the future.
On the 17th December, RIshi Sunak announced a further extension of all the Government’s current coronavirus business loan schemes. Applications for the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) and Coronavirus Future Fund have all been extended to 31st March 2020. Businesses must have started their application by this date in order to take advantage of the scheme. In addition, there are some further changes to the CBILS and BBLS schemes respectively.
The Government also announced in the Winter Economy Plan that providers will now have the option to extend the maximum loan term on CBILS loans to up to 10 years.
Following this announcement, Funding Circle has been working closely with the Government to understand the details on the loan extension for CBILS and how this will be rolled out. At present, the maximum loan term we can offer for new CBILS loans remains at 5 years for loans under £250,000, and 6 years for loans above £250,000. We’ll continue to monitor any updates provided by the Government and make relevant changes to ensure we can support businesses during these challenging times.
In addition to the changes to the CBILS scheme, the BBLS loan scheme saw further changes announced. The newly announced Pay As You Grow scheme will give providers the option to extend BBLS maximum loan terms from 6 to 10 years.
Under the scheme, businesses will also now have the option to temporarily move to interest-only payments for up to 6 months, and this option can be used up to a total of 3 times. Businesses will also be able to pause their repayments completely for up to 6 months, however this option can only be used once, and can only be taken after the first 6 payments on the loan have been made.
In addition, the Chancellor also stressed that no business taking up Pay As You Grow will see their credit rating impacted as a result of taking advantage of these benefits.
To help support businesses in High alert level areas, which are not legally closed but are severely impacted by the restrictions on socialising, the Government will provide further funding to Local Authorities. This will be based on the number of hospitality, hotel, B&B and leisure businesses in their area.
The above grant figures are an approximate guide, and the grants businesses actually receive may vary. They are equivalent to 70% of the grant amounts given to legally closed businesses. Those businesses in Very High alert levels will be eligible to receive a grant of up to £3,000, whether they are closed or open.
In addition, Local Authorities will also be given a 5% top up amount to these approximate grant amounts to cover businesses that may be affected by local restrictions, but don’t fit into these categories. Local Authorities will determine which businesses in their area are eligible for grant funding, and what funding to allocate to each business.
When lockdown was implemented back in March, businesses could automatically defer their VAT payments that would be due in the period March to June 2020. Now, with the latest announcement, businesses will be able to spread this payment over the financial year 2021/22 year, allowing them to pay in 11 equal instalments. However, they will be required to opt in to take advantage of this, and details on how to do this will be in place by early 2021.
The reduced rate of VAT (5%) that was introduced previously will continue to apply to food and non-alcoholic beverages from pubs, bars, cafes and restaurants, accommodation and admission to attractions in the UK. This will be in place until 31st March 2021.
The Chancellor announced an update to the Jobs Support Scheme on 22nd October. Employees on the scheme will now receive 73% of their usual wages, whilst working fewer hours.
The scheme is currently on hold until the furlough scheme, which has now been extended to the 30th April 2021, is concluded.
To learn more about the scheme and how you can benefit, we’ve put together a full breakdown, including key dates and more, here.
It’s important to remember that when taking a loan your business is liable for the full loan amount. The CBIL and BBL schemes provide a guarantee to the lender, not to the business.
All information is correct at time of publishing. While we want to help as much as we can, the information and documents found here are provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here.If you have any questions, please speak to your professional adviser or seek independent legal advice.
The Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) are managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy and Industrial Strategy. The provision of CBILS or BBLS should not be construed as an endorsement or warranty of Funding Circle by the British Business Bank, or the government of the United Kingdom. British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). Full details on CBILS and BBLS and the list of participating CBILS and BBLS lenders can be found on the British Business Bank website.
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