Just as we’re all getting to grips with what’s on offer, as support for SMEs, the chancellor announces changes regards available financial assistance. So, let me try to help you through this by clearing away some of the weeds on your path to these Grants and Loans.
Grants
The first support came back in March, in the form of Coronavirus Job Retention Scheme, commonly known as Furlough. This one would help those that set up as Ltd companies, as the owners are eligible for the payment, based of 80% of their wages.
Unfortunately, many won’t see the max of £2,500, since for years they’ve opted for a low salary topped up via dividends payments, (excluded from this calculation.) I’d suggest you apply for it, if you haven’t already, as if you’re at the personal allowance mark of £12,500, then that’s £833.00 per month in your pocket
Note: ~ This will be a Taxable income for your business, so make sure to offset it by paying yourself the fully amount as a salary, and not leaving some in the business. Presently when on furlough, you cannot legally carry on any works for the business, even marketing activities.
The NEW changes announced see a phased reduction of this support over the coming months. Furlough will continue till October 2020 at which point it will be stopped. Flexibility for employees to work part-time and still have furlough support will be possible from 1st July.
Contribution ratios:
June & July ~ Same as before.
August ~ Government: 80% (£2,500pm cap)
Employer: National Insurance (NI) + Pension Contribution (PC) payments.
September ~ Government: 70% (£2,190pm cap)
Employer: 10% + NI & PC
October ~ Government: 60% (£1,825pm cap)
Employer: 20% + NI & PC.
November ~ Government: ZERO
For Sole Traders/ Partnerships, support became available from 13th May, in the form of The Self-Employment Income Support Scheme, via the Government’s Website. You just need to have your Unique Taxpayer Reference and NI number to check your eligibility.
~ It’s 80% of the average trading profits for past three years, (Tax years 2017,2018 & 2019.) ~ Is paid as a three-month lump sum ~ Trading profits must be below £50,000 ~ You should still have been trading between 2019/2020 ~ Capped at max total of £7500.
Note: ~ This is a taxable income, and so make sure to keep 20% aside for future tax payments. So realistically you’re only getting 60% income support from the government!
~ If you’re a partnership, check eligibility under both of your NI numbers, as I’ve heard of a few cases when all the partners have received this support.
NEW Announcement: A second round of funding will be available, with applications in August. Much the same as before, expect it’s 70% of average trading profits with a cap of £6,570 total
Those with business premises could be eligible, via your Local Council, for either:
~ The Small Business Grant: “Pay little or no business rates are entitled to a one-off payment of £10,000”.
or
~ The Retail, Hospitality & Leisure Grant: “A property with a rateable value of £15,000 or under, you maybe eligible for a grant of £10,000………. Rateable value of over £15,000, but less then £51,000, you maybe eligible for a grant of £25,000.”
Note: ~ Available for both Ltd or Sole-traders/ Partnerships
~ Taxable income for the business
~ Some councils have approached businesses themselves, while others will only offer it if you contact them.
~ Not available if you work from home. If you have a registered outbuilding for business rates, it’s worth trying for.
~ Some shared workspaces might be eligible, so once again just ask.
Loans
The Coronavirus Business Interruption Loan
and Coronavirus Future Fund are a few of the loans available.
But I would like to highlight the Bounce Back Loan. Generally, I’m not one to encourage taking out loans, but this could be a great lifesaver for many. (I’m not a financial adviser, so read all the small print.)
It’s potentially a great way to reduce monthly outgoings by consolidating existing loans/debts/credit cards, and have some funds to pay yourself a salary/for training/business improvements.
~ 100% guaranteed by the Government ~ Borrowing between £2,000 and upto 25% of Turnover, subject to a maximum of £50,000 ~ NO Repayments/interest for the first 12 months ~ Loan length is 6 years ~ NO early repayment fee ~ It’s at a rate of 2.5% (in some cases lower,) per year.
Note: ~ Available for both Ltd and Sole-traders/Partnerships. I’ve heard of a few people that run as both, and have managed to obtain the loan for both.
~ You need to have a Business account, as application is generally via the banks. It doesn’t have to be your own bank, but advisable to get a quicker response.
~ Those that have been running their businesses via personal accounts, you might be able to still apply, by set-up a feeder account. It will take long to get confirmation about eligibility.
Those just starting out or just after April 2019, will find it hard to get support via the Self-employed scheme, but could be eligible if they have premises. However, the Bounce back Loan could be a support line, as the Government website states that
“You can apply for a loan if your business:
~ is based in the UK
~ Was established before 1st March 2020
~ Has been adversely impacted by the coronavirus”
So, that’s a quick refresher of some of what’s available for SMEs, and my suggestion would be TRY to get as much as is available for you. Don’t wait for your accountant/financial adviser to look into it for you…It’s your business….Your life….Make things come through as you do when running your business.
I’m happy to guide if you need it.
Keep safe and in good spirits.
You can contact Mandeep here:
Email: mgabhari@hotmail.co.uk
LinkedIn: https://www.linkedin.com/in/mandeep-singh-gabhari-a4893984/