Small business loans

Take your next step with fast, affordable business finance.

Apply Now

Funding Circle

Resources >   Knowledge & Skills  >  Borrower Coronavirus Updates  >  

Winter Economy Plan: A guide for small businesses

Borrower Coronavirus Updates

Winter Economy Plan: A guide for small businesses

Updated: 23 October 2020

Update 22/10/20:

The Chancellor has announced further measures to support the economy across the winter months. The latest package of measures include further grants for the self-employed, extensions to the Government’s coronavirus loan schemes, business grants, as well as tax deferrals and a new Jobs Support Scheme. Here, we take a look at the latest announcements and what this means for small businesses in the UK.

Self-Employed Income Support Grant (SEISS)

In order to help self-employed professionals through the winter months, the Chancellor unveiled the Self-Employed Income Support Grant (SEISS). This grant is only available to those professionals who have:

  • Submitted their Income Tax Self-Assessment tax return for the tax year 2018-19
  • Continued to trade in 2019-20 and intend to keep trading in 2020-21
  • Been adversely affected by Covid-19
  • Average self-employed trading profits of no more than £50,000. Trading income should be at least half of total income

It offers 40% of average monthly trading profits, paid in a single instalment, and covers 3 months’ profits for November 2020 through to January 2021. The grant is capped at £3,750. Though the date for businesses to apply has not been announced yet, we will update this article once this information becomes available.

In addition, there will be a fourth grant for self-employed professionals to cover February 2021 to April 2021. The Government will confirm the details of this in the future.

Government loan scheme extensions

Another welcome piece of news from the Winter Economy Plan was the extension of all the Government’s current coronavirus business loan schemes. Applications for the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) and Coronavirus Future Fund have all been extended to 30th November 2020. Businesses must have started their application by this date in order to take advantage of the scheme. In addition, there are some further changes to the CBILS and BBLS schemes respectively.

Coronavirus Business Interruption Loan Scheme (CBILS)

Along with the extension for applications, the Government has also announced that providers will now have the option to extend the maximum loan term on CBILS loans to up to 10 years.

Following this announcement, Funding Circle has been working closely with the Government to understand the details on the loan extension for CBILS and how this will be rolled out. At present, the maximum loan term we can offer for new CBILS loans remains at 5 years for loans under £250,000, and 6 years for loans above £250,000. We’ll continue to monitor any updates provided by the Government and make relevant changes to ensure we can support businesses during these challenging times.

Bounce Back Loan Scheme (BBLS) — Pay As You Grow scheme

In addition to the changes to the CBILS scheme, the BBLS loan scheme saw further changes announced. The newly announced Pay As You Grow scheme will give providers the option to extend BBLS maximum loan terms from 6 to 10 years.

Under the scheme, businesses will also now have the option to temporarily move to interest-only payments for up to 6 months, and this option can be used up to a total of 3 times. Businesses will also be able to pause their repayments completely for up to 6 months, however this option can only be used once, and can only be taken after the first 6 payments on the loan have been made.

In addition, the Chancellor also stressed that no business taking up Pay As You Grow will see their credit rating impacted as a result of taking advantage of these benefits.

Business grants

To help support businesses in High alert level areas, which are not legally closed but are severely impacted by the restrictions on socialising, the Government will provide further funding to Local Authorities. This will be based on the number of hospitality, hotel, B&B and leisure businesses in their area.

  • For properties with a rateable value of £15,000 or under, grants of £934 per month will be made available
  • For properties with a rateable value of between £15,000 to £51,000, grants of £1,400 per month will be made available
  • For properties with a rateable value of exactly £51,000 and over, grants of £2,100 per month will be made available

The above grant figures are an approximate guide, and the grants businesses actually receive may vary. They are equivalent to 70% of the grant amounts given to legally closed businesses. Those businesses in Very High alert levels will be eligible to receive a grant of up to £3,000, whether they are closed or open.

In addition, Local Authorities will also be given a 5% top up amount to these approximate grant amounts to cover businesses that may be affected by local restrictions, but don’t fit into these categories. Local Authorities will determine which businesses in their area are eligible for grant funding, and what funding to allocate to each business.

Tax deferrals

VAT

When lockdown was implemented back in March, businesses could automatically defer their VAT payments that would be due in the period March to June 2020. Now, with the latest announcement, businesses will be able to spread this payment over the financial year 2021/22 year, allowing them to pay in 11 equal instalments. However, they will be required to opt in to take advantage of this, and details on how to do this will be in place by early 2021.

Hospitality and Tourism VAT extension

The reduced rate of VAT (5%) that was introduced previously will continue to apply to food and non-alcoholic beverages from pubs, bars, cafes and restaurants, accommodation and admission to attractions in the UK. This will be in place until 31st March 2021.

New Jobs Support Scheme

The Chancellor announced an update to the Jobs Support Scheme on 22nd October. Employees on the scheme will now receive 73% of their usual wages, whilst working fewer hours.

The scheme will start on the 1st November 2020 and will run for 6 months.

To learn more about the scheme and how you can benefit, we’ve put together a full breakdown, including key dates and more, here.

It’s important to remember that when taking a loan your business is liable for the full loan amount. The CBIL and BBL schemes provide a guarantee to the lender, not to the business.

All information is correct at time of publishing. While we want to help as much as we can, the information and documents found here are provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here.If you have any questions, please speak to your professional adviser or seek independent legal advice.

The Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) are managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy and Industrial Strategy. The provision of CBILS or BBLS should not be construed as an endorsement or warranty of Funding Circle by the British Business Bank, or the government of the United Kingdom. British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). Full details on CBILS and BBLS and the list of participating CBILS and BBLS lenders can be found on the British Business Bank website.

Great Review:

5779 REVIEWS