With the hospitality industry expected to take temporary, but substantial hit as a result of the coronavirus pandemic, over the next few weeks things could get difficult for small and medium businesses. While there’s nothing to suggest that the sector won’t successfully recover, now’s a good time to get your finances in order and look at how long you can ‘last’ if you do find that there’s a significant dent in your income.
As it stands, the Government has suggested avoiding pubs, clubs and bars, but are yet to officially close them, leaving it difficult to claim on insurance. Because of this, it’s best to be as realistic with your projections as possible and you may need to look at how you can cut expenses or increase sales by doing something different than your usual order of business.
Cutting cost also includes speaking to your suppliers or landlords to ask if there’s a way they can reduce financial pressure over the coming months such as pausing rent payments. You should also speak to your mortgage company and credit providers to find out what measures they have in place for people whose income is affected during these unusual circumstances. Finally, if your accommodation is tied to your pub, you can call the licensed trade charity helpline.
The Chancellor is shortly to announce a new set of economic support measures. Some European countries (France for example) have said that no business will go under due to Coronavirus. We expect that many countries will follow suit, although we do not yet know what that will mean in practice. So, while the situation and advice are rapidly changing, the Government has supplied the following information as of yesterday:
The Government will bring forward legislation to allow small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. You can check the eligibility criteria for the scheme, here.
The government plans to increase the Business Rates retail discount in England to 100% for the 2020 to 2021 tax year for properties below £51,000 rateable value. The relief will also be expanded to the leisure and hospitality sectors in response to COVID-19. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
Those businesses eligible for the newly expanded retail discount and/or the new pubs discount may need to apply to their local authority to receive the discount. Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority and the guidance for local authorities on the application of the expanded retail discount is expected to be published by 20 March.
The government will provide an additional £2.2 billion in funding for local authorities to support small businesses that already pay little or no business rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £3,000 to business’ currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs, however, it’s not yet clear how this scheme can be accessed.
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch in a matter of weeks to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
If you’re concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
Businesses should check with their insurance provider if they are covered. Unfortunately, many businesses are unlikely to be covered as most business interruption insurance policies are dependent on damage to property, which will exclude pandemics. Some businesses may have purchased a specific add on relating to notifiable diseases, but some of these will still specify damage to the building. Some businesses may have purchased supply chain or denial of access cover which may meet their needs in this case.
Find out more about government financial support here: https://www.gov.uk/business-finance-support
If you’d like to chat about your concerns, don’t hesitate to contact us at firstname.lastname@example.org and we’ll do what we can to support you. We’re here to help.