Author: md_admin

On 27 April 2020 the UK’s seven largest small business lenders announced they had relaxed their evidence requirements for applications to the Coronavirus Business Interruption Loan Scheme (CBILS).

The lenders will use their own information when processing and approving applications, rather than relying on businesses providing forecasts and business plans.

In a joint statement, the seven lenders and trade association UK Finance stated:

‘The reforms to CBILS announced by the British Business Bank and HM Treasury with the support of the regulators provide welcome changes that should enable banks to provide finance to businesses more quickly alongside other forms of support including capital repayment holidays.

‘Lenders are working hard to ensure we provide support swiftly and responsibly and we will continue to work closely with customers to help them identify the finance that is right for their business and financial circumstances.

‘Following the changes to the scheme announced today lenders will only ask businesses for information and data they might reasonably be able to provide at speed and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability.’

Internet link: UK Finance press release

On 20 April 2020 the government’s Coronavirus Job Retention Scheme went live for applications.

The scheme allows businesses to furlough their employees, with the government paying 80% of their wages up to a maximum of £2,500.

The Coronavirus Job Retention Scheme is open for four months and was backdated from 1 March 2020 to the end of June. Chancellor Rishi Sunak stated that the scheme would be kept under review and extended if necessary.

There were applications from over 430,000 employers covering over three million employees in the first week of the scheme’s operation.

The Chancellor said:

‘We’ve taken unprecedented action to support jobs and businesses through this period of uncertainty, including the UK-wide Job Retention Scheme. With the extension of the coronavirus lockdown measures . . . it is the right decision to extend the furlough scheme for a month to the end of June to provide clarity.

‘It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so.’

Internet link: GOV.UK publications 

HMRC has released guidance on the COVID-19 Self-employment Income Support Scheme.

Under the scheme, self-employed individuals will be able to claim a taxable grant based on an average of their earnings over the past three years. To be eligible, workers must have filed all relevant income tax self assessment returns; have traded in the 2018/19 and 2019/20 tax years, and intend to carry on trading in the 2020/21 tax year. Profits, based on an average of the last three years, must be no more than £50,000, and at least equal to any non-trading income, such as employment income, dividends or rental income.

Directors of their own companies who are paid through Pay as You Earn (PAYE) may be able to get support via the Coronavirus Job Retention Scheme.

HMRC began to contact those eligible in early May and invited them to apply online. Payments are scheduled to start later in May and run for three months, but may be extended if necessary.

Internet link: GOV.UK publications 

The UK government launched an online platform to help businesses access financial support during the COVID-19 crisis.

The Coronavirus Business Support Finder Tool will guide businesses through the range of loans, tax reliefs and cash grants to combat the adverse economic effects of the COVID-19 lockdown.

The tool asks business owners to fill out a short online questionnaire. It then directs them to a list of financial support for which they may be eligible.

The tool takes the user through various questions about their business, including location, number of employees and turnover.

Chancellor Rishi Sunak said:

‘We’ve launched an unprecedented package of support to protect jobs, businesses and incomes during these challenging times. Millions are already benefiting and this new online tool will allow firms and individuals to identify what help they are entitled to in a matter of minutes.’

Internet link: GOV.UK publications

The Office for Budget Responsibility (OBR) has warned that the UK economy could shrink by 35% this quarter due to the COVID-19 crisis.

The OBR said that the outcome was modelled on an assumption that the current lockdown would last for three months. It stated that a three-month lockdown followed by three months of partial restrictions would trigger an economic decline of 35.1% in the quarter to June alone.

The lockdown would push up the UK’s borrowing bill to an estimated £273 billion this financial year, or 14% of Gross Domestic Product (GDP).

However, the OBR said extra spending by the Treasury to support the economy was crucial to limit economic damage.

The OBR’s estimate followed a global economic forecast published by the International Monetary Fund (IMF), which predicted a 3% contraction in global growth.

Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said:

‘This makes for bleak reading and stresses the need for the right policies to support our economy through this crisis. The need for co-ordinated global action to rebuild confidence has rarely been greater.

‘The government will also need to work with businesses and many parts of civil society here at home to create a plan to revive the economy once the lockdown is lifted.’

Internet link: OBR press release