Money help for entrepreneurs during COVID-19
Bloom exists to support entrepreneurs make their businesses, well, bloom. During these challenging times, we've enlisted the expertise of financial expert and founder of #ThisGirlInvests, Prerna Khemlani, for some practical advice to help business owners weather the COVID-19 storm:
We’ve all had our finances turned upside down – especially those who are self-employed and business owners.
With the arrival of this pandemic, our revenue streams may have dried up (or not, we may be thriving and redirecting our businesses!) Regardless, uncertainty is high.
Therefore, in this Bloom post we will be summarising the latest and greatest on how to deal with your finances during this pandemic. So what are the key highlights you need to know about?
Rishi Sunak (we love him, don’t we?!) has created the coronavirus loan scheme for all businesses with loans depending on turnover (a.k.a. revenue), delayed tax payments and introduced a range of government grants. See the lowdown below:-
YOU CAN GET A LOAN
Coronavirus Business Interruption Loan (CBIL)
As part of CBIL, you can access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years.
For any loans you get, the government will pay the first 12 months of interest payments and any fees imposed by the lender (known as Business Interruption Payment). Therefore, there are no upfront costs and lower initial repayments as your loan doesn’t accrue interest.
The Government is underwriting 80% of the Loan you take (i.e. if you fail to pay the loan, the Government will pay up to 80% of the loan back to the lender, making this lower risk for the lender).
The following businesses are not eligible to apply:
banks, insurers and reinsurers (but not insurance brokers)
further-education establishments, if they are grant-funded
state-funded primary and secondary schools
Coronavirus Large Business Interruption Loan (CLBIL)
Turnover/Revenue Government Loan
Under 45m See CBIL above
Between £45m and £250m Up to 25 million GBP
Over £250m Up to 50 million GBP
Very large investment grade companies could access the Bank of England’s (BoE) coronavirus bond-buying programme.
YOU CAN DELAY YOUR TAX PAYMENTS
If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020 (for periods ending February, March & April), you have the option to either pay the VAT or defer the payment until a later date (but before 31 March 2021). You do not need to tell HMRC that you’re deferring your payment – easy peasy.
Self-Assessment Tax Bill
You can delay making your second payment on account due 31 July 2020. If you choose to delay, you’ll have until 31 January 2021 to pay it.
If you’re in the Retail, Hospitality and Leisure industry, you don’t have to pay business rates in 2020/2021.
YOU CAN APPLY FOR A GRANT
If you don’t want a loan or to delay a tax payment, you can get a Grant from the Government (this doesn’t need to be repaid, unlike the loan).
There are three key types:-
Self-Employment Income Support Scheme (SEISS)
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 a month. It will be available for 3 months but may be extended and requires you to have submitted your Self Assessment tax return for tax year 2018 and 2019. Note that your trading profits must be <£50k to apply for this. Find out more here.
The Small Business Grant Fund/ the Retail, Hospitality and Leisure Grant Fund
This is arranged by the Local Authority. Your local authority will be in touch if you’re eligible. Your local authority is who you pay your business rate bill to.
Under the Small Business Grant Fund (SBGF) all eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.
Under the Retail, Hospitality and Leisure Grant (RHLG) eligible businesses in England in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of less than £51,000 will be eligible for a cash grants of £10,000 or £25,000 per property.
Property Rateable Value Government Grant
Up to £15,000 £10,000
Between £15,001 and £50,999 £25,000
Over £51,000 £0
Note that you cannot get these grants if the property is for personal use. Find out more by clicking here.
Now that saved time, go smash your business goals! Good luck Bloomers!
Thank you Prerna Khemlani for this very helpful blog post. Please give her account a follow, @thisgirlinvests, and join her at one of her Sunday sessions here, to find out more about taking control of your own finances.