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Where to get help and cut costs during the coronavirus pandemic

We are now a few weeks into the UK’s ‘lockdown’, and the existence of many small – and large - businesses is under threat. An inability to operate cash flows as normal is undoubtedly a major concern and so many are seeking ways to cut costs and access cash, and fast.

I applaud the Government’s emergency economic measures for small businesses so far. Its response has been extensive and very quick – and it is certainly trying its best. However, some SMEs are still worried they aren’t getting enough help, if any. That said, regardless of size or sector, if you are a small business and worried in the current climate, whilst there are grants and relief available, there are also avenues that you can undertake on your own to cut costs and hunker down during this period.

Applying for empty rate relief

Last month, as part of its emergency package, the Chancellor revealed that all retail, leisure and hospitality businesses would pay no rates for 12 months starting from April 2020. These rates that businesses pay on their properties have already put many dangerously close to the red zone. With statistics showing that half of UK businesses will benefit from this relief, this measure will be a critical support for thousands of businesses.

However, whilst these sectors are receiving a welcomed rates break, some SMEs may feel they do not fall within this category. In particular, office-based businesses have had to struggle on, facing significant occupier rates bills despite offices being empty as people work from home under Government guidelines.

Yet, there is a way for such businesses to reduce their rates bill and cut overheads – try applying for empty rate relief. Without the experience or resources to get to grips with the complexities of the rates system, many SMEs may be unaware of this option. However, empty rate relief would see the business pay no rates for the first three months, if accepted by the authorities. As the application goes through local councils, rather than the underfunded Valuation Office Agency (VOA) and its lengthy Check Challenge Appeal (CCA) system, businesses are likely to feel the relief quickly.

We have unfortunately seen most local authorities reject these applications in recent weeks, on the grounds that offices are still occupied by files, computers or other typical office equipment. Technically, they are right, as the property is not strictly empty. However, it is paramount that businesses who need more financial support in order to survive this crisis continue to put pressure on local authorities for this relief. At this acute point in the Covid-19 crisis, local authorities must be more flexible with their standard protocols, especially since these offices have been told to close by law; businesses could well revert back to councils with an additional challenge on this very basis. The Rating Surveyors’ Association (RSA) is actively looking into this option further.

With continued uncertainty around how long our ‘new normal’ could last for, it would be fantastic to see the Government offer a three-month rates relief for all commercial property.

But, in the meantime, businesses should look at their office space and consider submitting an application for part-occupied relief on areas that aren’t needed at the moment - for example, all of their office space with the exception of the IT support room? It should be noted that this relief is discretionary. However, in this climate, charging authorities should be more lenient.

Understanding grant eligibility

In addition to the Government’s business rates holiday, it launched a range of business grant funds for those who require a cash injection to cover overheads during a period of reduced income. However, it seems that some small businesses again worry that they aren’t eligible for these schemes.

By way of brief overview, the Government has launched two grant funding schemes delivered by local authorities: the Small Business Grant Fund, and the Retail, Hospitality and Leisure Grant Fund. Despite initial ideas about eligibility, it is vital that small businesses review the requirements for each scheme in-depth as, although somewhat dense, there may be scope for support.

Small Business Grant Fund

Under the Small Business Grant Fund (SBGF), all businesses in England in receipt of Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) as of the 11 March 2020 are eligible for a £10,000 non-refundable grant. It is estimated that this will apply to 730,000 businesses – a fantastic initiative by the Government!

Retail, Hospitality and Leisure Grant

Under the Retail, Hospitality and Leisure Grant Fund (RHLGF), businesses in England that would have been in receipt of the Expanded Retail Discount on 11 March, with a rateable value (R.V.) of less than £51,000, are eligible for grants of up to £25,000 per property. Those businesses with a property that has a R.V. of up to and including £15,000 will receive a grant of £10,000, and those which have a R.V. of £15,000.01 or over and less than £51,000 will receive a grant of £25,000. Properties that have a R.V. of £51,000 or over are not eligible for this scheme unfortunately, nor those that are not occupiers under the business rates system; this includes landlords so may pose a significant problem to them in the comings weeks.

Importantly, any properties falling within both the Small Business Rate Relief and Expanded Retail eligibility cannot be awarded both grants on the same property, and instead should be awarded one £10,000 grant.

Local authorities should now have received all of the payment from central Government to distribute these grants and should be in touch with businesses that are eligible to apply. This ‘no application’ grant was intended to enable businesses to receive grants as quickly as possible and meet the urgent need for cash. Yet, if you believe you are eligible and haven’t been approached, it may be worth reaching out to your local authority to confirm you are on the list, and if you aren’t, why. Also, if you believe you still qualify, it would be worth contacting the charging authority and asking them if there is anything they can do - for example, rate deferment.  

Next steps

Facing such a challenge as we are, the Government is aware that their support must go beyond the normal realms of state intervention. Small businesses must therefore utilise these unprecedented support measures. However, businesses need not stop here if they require more cash cutting support – considering empty rate relief or a case with the charging authorities may also prove critical in these times.

Looking to the bigger picture, I would also like to see the expanded retail discount extended to other uses – for example, doctors’ surgeries and dentists do not currently receive this relief! This is surely just an oversight? Additionally, it would also be good to see the Government extend relief to hospitals, airports and car parks. Industrial properties have so far been ignored whilst supermarkets get the full relief – is this fair? Overall, it is of course a complex system but support for SMEs is available.