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13 Oct, 2020|

COVID-19 Support Available To Small Businesses

Since the Coronavirus pandemic hit and the subsequent UK wide lockdown was announced in March, businesses across the country have been making use of various government support schemes. A key one being the furlough scheme. As the furlough scheme comes to an end this month, we look at COVID-19 support small businesses can continue to access.

In September the government announced new COVID-19 support schemes as well as extensions to some of the existing schemes. Additional details of the COVID-19 support small businesses can continue to access were announced by the chancellor as part of his Winter Economy Plan.

We will look specifically at

  • The Job Support Scheme
  • The Bounce Back Loan Scheme
  • The Self Employment Income Support Scheme

The Job Support Scheme

The Job Support Scheme effectively replaces the furlough scheme but is designed to offer support in a more focussed way.

The government define the Job Support Scheme as ‘designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce’.

What support does the Job support scheme offer?

Effectively, the Job Support scheme enables employees to work for fewer hours than they normally would if their employer’s business is facing reduced demand caused by the effects of Coronavirus. With support for wages for the hours not worked being provided by the government and the employer.

The scheme starts on the 1st November and is currently set to run for 6 months.

To be eligible, employees must be able to work at least one third of their normal hours. I.e. their job is considered ‘viable’. This threshold is for the first 3-month period of the scheme. It will be reviewed by the government for the second half of the scheme.

Wages for the hours worked will be paid by you as the employer.

Wages for the hours not worked will then be subsidised by you, the employer, and the  government. Both of whom will pay one third of the remaining wages. This means that the employee will receive a minimum of 77% of their normal wage (where the government contribution is not capped).

The government contribution will be capped at £697.92 a month.

This BBC article provides a useful graphic showing how the hours worked/not worked and wages paid is calculated.

Importantly, the Job Support Scheme is open to all small and medium sized businesses. There is no financial assessment test for SME’s but there is for larger businesses.

The Bounce Back Loan Scheme

The bounce back loan scheme is aimed at allowing smaller businesses to access funding at a quicker speed than normal during the coronavirus pandemic.

Small and medium sized business can borrow from £2,000 up to 25% of their turnover. To a maximum loan of £50,000.

  • Loans are 100% backed by the government
  • There is no interest in the first 12 months
  • Interest after the first 12 months is 2.5% a year. Much lower than for personal loans.

For full details of the bounce back loan scheme and to see if you are eligible visit the gov.uk website.

How was the bounce back loan scheme altered in September?

In September the government also announced some more changes to bounce back loans under the ‘Pay as you grow’ scheme.

  • The deadline to apply for a bounce back loan was extended to the end of November
  • Loans could originally be taken out over 6 years. In September this was extended to 10 years. This gives the opportunity for lower monthly payments
  • You can now take a payment holiday- one payment holiday lasting up to 6 months is allowed over the term. You can take a holiday once you have made at least 6 payments
  • And/or have interest only payment periods of up to 6 months – this can be done 3 months over the term of the loan, with each interest only period lasting up to 6 months

Self-Employment Income Support Scheme 

The Self-Employment Income Support Scheme enables eligible self-employed individuals to claim a taxable grant.

Two grants have been made available in the first wave of COVID-19 support for small business. The first grant is closed for claims now. The second grant remains open for people to make claims until the 19th October.

The second grant provides 70% of 3 months average trading profits, capped at £6,570 in total. The grant is  for those whose businesses have been adversely impacted by coronavirus on or after 14th July.

How has the Self-Employment Income Support Scheme been extended?

It was also announced in September that the self-employment income support scheme would be extended.

Details of the extended scheme include:

  • The extended scheme will run for 6 months from 1st November
  • It will provide 2 grants – each covering a 3-month period
  • Eligibility criteria for the scheme remain the same
  • The first grant will cover Nov-Jan. It will provide a taxable grant covering 20 per cent of average monthly trading profits. It will be paid in a single instalment covering 3 months’ worth of profits. The grant will be capped at £1,875.
  • Details of how to claim will be released at a later date
  • The second grant will cover Feb-Apr. The level of support to be offered will be confirmed by the government at a later date.

For full details about the extension being made to the Self Employment Income Support Scheme visit the gov.uk website.

What if my business is forced to close because of COVID-19 restrictions?

On Friday 9th October, the chancellor also announced some additional support for businesses who are forced to close because of COVID-19 restrictions.

The Job Support Scheme will be expanded to provide additional support to those whose

business is legally required to shut due to either local or national lockdown.

For those businesses eligible, the government will pay two thirds of an employee’s salary, up to a maximum of £2,100 a month. The expansion to the scheme will start from the 1st November and run for 6 months, as with the main scheme itself.

It was also announced that the Local Restrictions Support Grant Scheme would be made more generous. This will mean that eligible businesses in England can claim up to £3,000 a month after only 2 weeks of closure. The original scheme provided grants of up to £1,500 every 3 weeks.

At Anthony Jones, as a small business ourselves, we appreciate that this has been a hard time for many people. We care about our customers and the success of their businesses. That is why we work hard to get the insurance you need to protect your business at the best possible price. If you have any questions about your small business insurance needs do not hesitate to get in touch with us. Call us on 020 8290 9080 or email us at business@anthonyjones.com.