Funding Submission Support
GOVERNMENT BUSINESS FUNDING IN THE UK
To help support businesses during this Covid-19 pandemic, the government has introduced several schemes, including the Coronavirus Job Retention Scheme and the Coronavirus Business Interruption Loan Scheme.
Working out which government business funding or loan scheme is best suited to your company, and how to apply, can be less than straightforward.
We can help you navigate the submission process.
CORONAVIRUS JOB RETENTION SCHEME (CJRS)
CJRS is administered by HMRC. It currently pays 80% of employees' salaries, up to a cap of £2,500 per month – helping businesses keep staff on their payroll and potentially avoid redundancies.
All businesses are eligible; it is not restricted to the size of the employer, or sector. You do not need to demonstrate that your employees are off work as a direct result of the Covid-19 pandemic, and there are no limits to availability.
What is not changing?
Employers will receive the same support as they currently do until 31 July 2020 – grants for wages covering 80% of pay, up to a maximum of £2,500 per month, plus associated pension and employer NIC costs.
Companies will continue to have the option to top staff wages up above the 80% total and £2,500 cap for furloughed hours for the duration of the scheme.
What is changing?
From 1 July 2020
"Flexible furlough" will be introduced, which means a CJRS grant can be claimed for the days an employee is on furlough, even if they return to work for certain days (e.g. on furlough for three days of the week and working two days). The government will also cover employer National Insurance Contributions (NICs) and pension contributions for the hours the employee is on furlough. The employers will have to pay their employees for the hours they work.
It is important to ensure new Flexible Furlough agreements are in place with employees to make sure a CJRS claim can be made and employees understand how furlough pay is being calculated and the wider impact on terms and conditions.
The introduction of flexible furlough means that CJRS cannot be used for anyone who has not been furloughed before 10 June 2020, unless they are returning from qualifying parental leave.
Additionally, from 1 July, employers will not be able to claim for more employees in a claim period CJRS submission than made for a period prior to 1 July. This means that where a CJRS claim was say made in April for 50 employees on furlough, May for 45 employees and June for 32 employees, the maximum that can be included on a CJRS claim for periods from 1 July is 50 employees. This will require some cost analysis and workforce management.
From 1 August 2020
While the employer will still be able to claim a CJRS wage grant of up to £2,500 (or 80% of pay if lower) per month, the additional CJRS pension and NICs support will stop.
From 1 September 2020
The government will pay for 70% of an employee’s monthly salary for furloughed hours, up to £2,187.50, while the employer will need to cover an additional 10% of the wage, bringing it up to 80% (capped at £2,500). The employer will also have to cover pension contributions and NICs.
From 1 October 2020
The employer will have to pick up 20% of the CJRS wage costs (plus pension contributions and NICs), with the government's contribution going down to 60% of the wage for any furloughed hours (capped at £1,875).
End of October 2020
The CJRS arrangement is due to come to an end completely on 31 October 2020.
If you would like more details on the scheme, we have produced a set of CJRS FAQs.
OTHER GOVERNMENT BUSINESS FUNDING OPTIONS
In addition to the support given to pay employees, the government has also introduced four schemes to help with funding and cash flow.
BOUNCE BACK LOANS
The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year. Further information can be found here.
FUTURE FUND SCHEME
This is intended for start-up businesses and VC-backed or EIS-funded businesses. It offers convertible loans from £125,000 up to £5 million to innovative business facing financing difficulties as a result of Covid-19.
These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme. Further details can be found here.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
This scheme is designed to offer financial support to small and medium-sized businesses (SMEs), via participating, accredited lenders. It allows banks and other lenders to continue providing finance to SMEs with an 80% government guarantee on loans of up to £5 million.
For facilities below £250,000, personal guarantees will not be taken. Personal Guarantees for loans above £250,000 are at the discretion of the funder – but shouldn't include Principal Private Residence (PPR) and should be capped at of 20% of the outstanding balance of the CBILS facility, after the proceeds of business assets have been applied.
You can find more details here.
CORONAVIRUS LARGE BUSINESS INTERRUPTION LOAN SCHEME (CLBILS)
The reviewed scheme will give government-guaranteed loans of 80%, up to £200 million, to businesses with revenues of more than £45 million. It is worth noting that the amount and type of finance offered will vary between lenders.
Personal guarantees will not be taken for facilities below £250,000. For facilities above £250,000, personal guarantees may still be required, but claims cannot exceed 20% of losses after all other recoveries have been applied.
You can find more details here.
COVID-19 CORPORATE FINANCING FACILITY
This scheme is intended to support larger businesses, with the Bank of England stating it will buy Commercial Paper issued by investment-grade companies.
You can find more details here.
In all instances, the borrower remains 100% liable for the debt.
HOW CAN WE HELP?
Our understanding is that lenders have limited bandwidth/resource – and as such, they tend to focus on well-prepared and credible funding requests that are easy to present to credit committees.
We can offer job retention scheme guidance and help you understand how the government loan schemes work in more detail.
As part of this process, we will review your current funding options and future liquidity position, helping you prepare strong applications that maximise your chances of securing funding.
Our support includes:
- An initial appraisal of your recent historical trading, current forecasts and your ability to raise additional finance for headroom.
- Support with preparing for discussions with lenders (including short and longer-term forecasts, as well as impact on the business).
- Lender negotiations and progressing a transaction through to completion including:
- Increasing current facilities
- Relaxing current covenants
- Negotiating capital and interest repayment holidays
- New financing, including the government support loans where applicable
- Post Covid-19 general advisory support
VIRTUAL CJRS WORKSHOPS
We are hosting virtual workshops to help you with key CJRS support, that covers:
- Advice on Key Government Initiatives available to you, specifically the CJRS Scheme.
- Knowledge on CJRS and how it is applicable to your business.
- Overview of the benefits of voluntary vs compulsory furlough.
- How to assess the key interactions with pay, benefits and other aspects (e.g. gender pay gap, employment allowance, statutory leave and holiday)
- Undertaking CJRS claim and furlough pay assessments
Find out more about our CJRS workshops and how we can help your business.
Our teams are running workshops with businesses across a variety of sectors. The workshops are run remotely, using video conference. We require basic levels of data from your company and limited time-input.
It takes between 3-4 weeks to complete and the return on investment can be immediate and significant.
The workshop benefits include:
- Advice on how to phase staff back into the business
- Review of staff levels of competitors and the market leaders in your sector
- Support on developing a resilient workforce
- Longer term financial strength
- Increased engagement from staff
Find out more about our reboarding workshops.
BUSINESS SUPPORT & ADVICE TO HELP YOU THROUGH
We’re here for you and we’re working hard to keep you informed on everything you need to know. if you need advice on other areas of your cash flow planning and funding.