We are keeping up to date on the various government business support initiatives for the coronavirus outbreak. This includes use of the Corporate Finance Network and Xeinadin Groups we are members of. Great examples of business communities working together to share knowledge to help clients.
What we know at the moment:
- More information is coming out regarding the CBILS (Coronavirus Business Interruption Loan Scheme) offering by different banks, although we still don’t think banks are processing these loans to get ‘cash out of the door’ yet. They all appear to be using their Relationship Manager network to speak to their individual customers and tailor a normal bank offering first, eg overdraft, loan or invoice discounting facility. Only if these are not possible will they consider a CBILS. Those businesses without an RM are being allocated one in many banks via their call centre. Most banks are asking for personal guarantees, even under £250k, but the scheme won’t allow them to take a direct charge over a directors’ personal private residence. This gives directors some comfort, but of course a claim on a PG could mean ultimate bankruptcy, which would still result in the family home probably having to be sold. Many are putting banks under pressure to rethink their security requirements and this may change. The Corporate Finance Network are maintaining a listing of all funders’ criteria as they become clear and Kay Johnson Gee are part of this.
- The much-awaited self-employed support scheme will be announced later today. It is rumoured that it will be 80% of the average of the last 3 years’ monthly earnings for the self-employed. However, directors of limited companies earning some salary will have to use the wages scheme and it doesn’t look as though dividends will be included, as they’re classed as investment income. With pressure, this may change in the coming weeks. We are expecting the support to last initially for 3 months and probably capped at just under £3k per month. Assume this grant will then be taxable as income on next year’s tax return. Also best to assume it’s not going to be easy to get hold of HMRC and for them to send the funds over.
- ICAEW have issued guidance and examples about furloughed workers https://www.icaew.com/insights/viewpoints-on-the-news/2020/mar-2020/coronavirus-job-retention-scheme-furlough-guidance which is receiving a lot of attention and praise.
- Commercial tenants are being offered the same protection as residential tenants, in that they are allowed to take a 3 month rent holiday if they need to & landlords cannot issue an eviction notice. We suggest this is best done after negotiation, if possible, with individual landlords. The government have said they are also looking at support for landlords, no doubt to be announced in due course https://www.gov.uk/government/news/extra-protection-for-businesses-with-ban-on-evictions-for-commercial-tenants-who-miss-rent-payments
- Those claiming the grant for small rateable properties (the £10k or £25k grants) from their Local Authority, will need to complete a form which LAs are slowly issuing. They need to collate bank account details so they can issue direct to bank, rather than issuing a cheque. Unlikely to be paid for several weeks.
- VAT returns still have to be filed over the next quarter, even though payment is deferred. Companies must cancel their HMRC Direct Debit.
- Annual accounts can be filed at Companies House 3 months later than required at the moment.
- We encourage companies to assess their immediate cashflow requirements, supplier by supplier if necessary.
As always we are here to help wherever we can so please do not hesitate to get in touch