FAQs for small business owners on the COVID-19 virus

The current Covid-19 pandemic is causing havoc for businesses across the world. If you are an employer with a small business, you are likely struggling or are concerned about the future of your company in the current economic climate.

The virus has brought uncertainty, and the UK government has implemented a range of measures to help mitigate the impact on businesses that are unable to operate or have been forced to reduce their services. Here are some answers to the most burning questions that you might have related to your business finances:

How Can I Apply for Government Help?

The UK government has announced a number of loans and grants in the last few weeks that aim to assist businesses, large and small, through this tumultuous time.

If you are an SME, you can apply for the Coronavirus Business Interruption Loan Scheme (CBILS) that offers finance for small and medium-sized businesses up to £5 million.

Through this scheme, your business can access:

  • Loans
  • Overdrafts
  • Invoice finance
  • Asset finance

These options are available up to £5 million for up to six years. And the government will also make a Business Interruption Payment that will cover the interest payments and any lender-levied fees up to the first 12 months. The scheme is provided through commercial lenders that are backed by the government-owned British Business Bank.

You can apply for the scheme here.

Is My Business Eligible for Assistance?

Your small-to-medium-sized business is eligible for CBILS provided you meet the following criteria:

  • Your business is based in the UK
  • The business has an annual turnover of up to £45 million
  • Your borrowing proposal is considered viable

There is a different scheme available for larger businesses.

Can I Get Help with Employee Salaries?

Aside from the CBILS scheme, the government has also introduced the Coronavirus Job Retention Scheme, which is set to be available at the end of April.

This scheme is for employers who cannot maintain their workforce because your operations have been severely impacted. You can furlough employees and apply for a grant that covers 80% of their usual wage up to £2,500 per month.

This is a temporary scheme that is set to last three months but may be further extended if necessary. The scheme will help you retain your employees by lessening the burden on your cash flow from having to pay all of their salaries. All employers are eligible for this scheme provided:

  • You have a PAYE payroll scheme started on or before 28th of February 2020
  • You have enrolled for PAYE online
  • You have a UK bank account

Any employees that you hired after the 28th of February 2020 cannot be furloughed under this scheme or any workers on reduced hours or reduced pay.

Can I Get a Grant?

In response to coronavirus, the government announced support for small businesses, and businesses in retail, hospitality and leisure in the form of two grant funding schemes.

Businesses in England in receipt of either Small Business Rates Relief or Rural Rates Relief will be eligible for a grant of £10,000. Under the Retail, Hospitality and Leisure Grant, eligible businesses in England in receipt of the Expanded Retail Discount with a rateable value of less than £51,000 will be eligible for cash grants of £10,000 or £25,000 per property.

Local authorities are contacting eligible businesses to arrange payments of grants, so if you qualify, you won’t need to do anything.

Will I Need to Pay My Employees Sick Pay?

Yes, you will have to provide you employees who self-isolate due to coronavirus their usual sick leave and pay entitlements. As a result, the government has changed the rules regarding sick pay, and it is now payable from day one of self-isolation rather than day four.

SMEs with fewer than 250 employees will also be able to claim a refund on Statutory Sick Pay due to coronavirus. The scheme will repay employers the current rate of SSP for periods of employee sickness starting on or after the 13th of March 2020. It covers up to two weeks, starting from the first day of illness and covers those who could not work due to having coronavirus or could not work because they were self-isolating.

Can I Delay Tax Payments?

Yes, you can call HMRC to delay paying your second tax payment – that would usually be due on the 31st of July 2020 – until the 31st of January 2021. You will need to pay interest for late payments, so contact HMCR as soon as possible if you are unable to make your tax payments on time. 

Can I Defer VAT Payments?

Temporary changes have been made to VAT payments between the 20th of March 2020 and the 30th of June 2020 as another way to help businesses manage their cash flow.

If your business has a due VAT payment between these dates, you have the option to defer the payment to a later date.

Can I Claim of My Insurance?

Due to the government-imposed lockdown and restrictions, it should enable your business to make a claim provided you have an insurance policy that covers pandemics and government-ordered closures.

If you are covered, this should be under the Business Interruption section of your policy. Go carefully over your policy are check to see if you are covered for diseases, assess how broad the wording of the policy is. If you make a claim, you will need to provide evidence that the pandemic has caused your business to close, estimate the loss of earnings, including any documentation that can prove your earnings.

If you are not covered, it is likely not wise to switch insurance providers at this time, as it is likely you will be unable to claim from them even if their policy would cover coronavirus, due to the virus already being present and it no longer being an unforeseeable event.

To keep your business running, make sure you are paying close attention to NHS guidelines, keeping up to date with government announcements and any changes, and are being completely transparent with your employees and clients about what your company is doing in the face of the virus, and any changes you are making to mitigate the financial impact. Speak to your accountant about what you can do now to keep your cash flow healthy and keep your business running during these uncertain times.