Covid-19: Financial help for small businesses in the UK

23 Mar 2020

It’s a challenging time for SMEs around the world as the economic impact of the Coronavirus pandemic starts to unfold. Global shares have taken a hit, interest rates have been cut and the OECD has downgraded its growth forecasts as factories close to help contain the virus. On Friday 20 March, Rishi Sunak, the Chancellor of the Exchequer, announced the first set of measures to help businesses impacted by COVID-19. The government has pledged support for businesses through the Coronavirus Business Interruption Loan Scheme and other temporary and targeted measures. These are designed to help companies manage cash flow during this difficult period through unlimited loans and guarantees. An initial £330 billion of guarantees will be made available, which is equivalent to 15% of UK GDP. Bear in mind some aspects of business support are devolved and differ in Scotland, Wales and Northern Ireland. Full information and relevant links can be found on the government's support for businesses page.

Men making coffee in a coffee shop

Funding Options is here to help. Some of our lending partners are part of the Coronavirus Business Interruption Loan Scheme (CBILS); feel free to get in touch to find out more about how we can assist. In the meantime, here are some of the most frequently asked questions and key business support measures the UK government has announced so far.  

How will I manage to pay my employees?

Coronavirus job retention scheme

A scheme designed to enable all UK employers to carry on paying a percentage of their workers' salary for those who would otherwise be made redundant during the crisis. HMRC intends to reimburse 80% of furloughed workers' wage costs, up to £2,500 per month. HMRC is currently working on setting up a system to facilitate this. 

To access this scheme you will need to designate affected employees as "furloughed workers" and notify them of this. Once the new portal system is up and running, you'll be able to submit all the relevant information to HMRC. 

From July 1 2020, companies will be able to bring furloughed workers back part-time. Employers will be able to determine appropriate shift hours and patterns and will be responsible for paying the wages of those in work. 

Furloughed individuals will continue to receive 80% of their pay during the period they are unable to work until October, however, the amount the government contributes will change. 

Sick pay support

The government is planning to bring forward legislation that allows SMEs to reclaim Statutory Sick Pay (SSP) paid to employees due to coronavirus. The government will be liaising with employers over the next few months to set this up. In terms of eligibility, employers with less than 250 employees (as of 28 Feb 2020) will be be able to apply.

The government has published guidance for employees, employers and businesses, including advice on how to prevent the spread of the virus, what do to if an employee is showing symptoms, eligibility for sick pay and more.

Do any of the measures cover tax payments?

Deferring VAT and income tax payments

The government has said they will defer VAT payments for three months (March to June 2020). For Income Tax Self-Assessment, payments due on the 31 July 2020 could be deferred until 31 January 2021.

For self-employed people, Income Tax payment due in July will be deferred until January. Note: If you normally pay by direct debit you should cancel the it with your bank if you're unable to pay. 

Time To Pay

If you're a business owner or self-employed person in financial difficulty and have outstanding tax liabilities, you might be able to get support via HMRC's Time To Pay scheme. The support offered will be aligned to your individual needs and circumstances. Call HMRC on 0800 0159 559 if you've missed a payment or think you may miss the next.

Aside from deferred tax, is there any help for the self-employed?

The first measure the government bought in for the self employed was to suspend the minimum income floor. This means self-employed workers can now access Universal Credit in full at a rate equivalent to Statutory Sick Pay for employees. You can find more information and apply for Universal Credit via the government website here

On 26th March 2020 Chancellor Rishi Sunak announced that self-employed workers can apply for a grant worth 80% of their average monthly profits over the last three years (up to £2,500 a month) to help them cope with the financial effects of Covid-19. The scheme is open to those who earn under £50,000 a year and the money will arrive directly into people's banks accounts from HMRC in June.

Further eligibility criteria applies.

On 29 May 2020 Sunak confirmed that the UK government would be extending the Self-Employment Income Support Scheme (SEISS), offering self-employed workers affected by coronavirus the chance to claim a second and final payment in August. 

What help is available for retail, hospitality and leisure businesses?


Business rates holiday

For the 2020 to 2021 tax year, the government will implement a business rates holiday for retail, hospitality and leisure companies. This will apply to properties being used as the following"

  • Shops, restaurants, cafes, drinking establishments, cinemas and live music venues

  • Buildings used for assembly and leisure

  • Hotels, guest & boarding premises and self-catering accommodation

Use this business rates calculator to estimate the charge you won't have to pay this year.

Cash grants 

According to the UK government, cash grants of up to £25,000 per property are to be made available to businesses to retail, hospitality and leisure businesses via their Local Authority. The amount will be based on criteria such as sector and rateable business value.

Local authorities will be writing to businesses that are eligible for a cash grant. Local authorities can provide more information on eligibility criteria and the provision of these grants.

Will there be business rates relief for nurseries?

Yes, the government will also introduce a business rates holiday for nurseries based in England for the 2020 to 2021 tax year for properties occupied by providers that are on Ofsted’s Early Years Register and buildings that are entirely or mainly used for the provision of the Early Years Foundation Stage. 

Is there any support for businesses paying minimal/no business rates?

The Small Business Grant Scheme will provide funding for local authorities to support those businesses that usually pay no or little business rates due to small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. A single grant of £10,000 will be made available to eligible businesses to support ongoing business costs.

I can't afford my commercial rent – will I be evicted?

If you're unable to pay the rent on your premises up to (currently) 30 June due to COVID-19, you will be protected from eviction under the government's new measures.

Bear in mind that this isn't a payment holiday and you will still be liable for the rent. 

What is the Coronavirus Business Interruption Loan Scheme (CBILS) UK?

The UK government is increasing the amount businesses can borrow through the Coronavirus Business Interruption Loan Schemes (CBILS), a temporary replacement for the Enterprise Finance Guarantee Scheme, from £1.2 million to £5 million. It will guarantee 80% of the value and will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees.

The CBILS will operate in a similar way to the Enterprise Finance Guarantee Scheme in the sense that it is designed to encourage lending to viable UK businesses that would be turned down for a loan (or other form of debt finance) due to inadequate security.

Small and medium sized businesses from all sectors can apply for the full amount, however eligibility criteria does apply. Visit this page to find out more about the Coronavirus Business Interruption Loan Scheme delivered by the British Business Bank. Note: 40 accredited lenders are able to offer the scheme, some of which are Funding Options lender partners.

We've published an article detailing CBILS eligibility criteria and how to apply


On April 3rd 2020, Chancellor Rishi Sunak announced further action to support businesses affected by coronavirus by bolstering the CBLIS and announcing a new scheme for larger businesses, the Coronavirus Large Business Interruption Loan Scheme (CLBILS). 

- The CBILS will be extended so that all viable small businesses affected by COVID-19 will be eligible should they need finance to keep operating – not just those unable to secure regular commercial financing.

- The government is stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals.

- The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. 

Loans backed by a guarantee under the new CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later in April. 

The CBILS is currently due to end on 30 September so businesses must apply before then. The British Business Bank has extended the deadline for lenders to consider and process applications received by this date, to 30 November.

What is the Bounce Back Loan Scheme (BBLS)

Bounce back loans are specifically for SMEs in the UK that are experiencing cash flow problems or revenue loss due to the pandemic. Businesses can benefit from up to £50,000 of finance which is available through a number of British Business Bank (BBB) accredited lenders and partners.

At the time of writing, there are 20 accredited lenders, including high street banks like Barclays, HSBC and Natwest and Lloyds and alt-lenders (some of which are on the Funding Options platform), such as Tide.

The deadline for applications for the 100 per cent government backed BBLS is scheduled for 4 November. 

I run a larger business – do any of the measures apply to me?

COVID-19 corporate financing facility

If you've been affected by a temporary funding squeeze, the COVID-19 Corporate Financing Facility is designed to help you finance your short-term liabilities. It works by the Bank of England buying short-term debt from big businesses. It's also intended to support finance markets and ease the supply of credit for firms of all sizes. More information is available on the Bank of England website.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

As mentioned above, the new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. 

Are there any government loans to replace CBILS, BBL and CLBILS?

On the 3rd March 2021, in his latest Budget Chancellor Rishi Sunak announced Recovery Loan Scheme which will replace the previous government COVID-19 schemes when they end on 31st March.

The Recovery Loan Scheme is set to run from 6 April to 31 December 2021 and to provide lenders with confidence, the Government will guarantee 80% of the finance. Businesses will pay any interest and fees. As with CBILS loans, finance will only be available through accredited lenders. 

Term loans and overdrafts of between £25,001 and £10 million per business are available, as are invoice finance and asset finance facilities of between £1,000 and £10 million per business. 

You can use the loan funds for any legitimate business purpose and there’s no turnover restriction for businesses accessing the scheme. Term loans and asset finance facilities are available for up to six years and overdrafts and invoice finance for up to three.

You’ll be able to access the Business Recovery Loan Scheme if you’ve taken out a CBILS, CLBILS or BBLS facility, and the maximum amount you can borrow will depend on the lender’s assessment and the scheme’s criteria.

Simon Cureton

Chief Executive Officer

Simon has been Chief Executive Officer at Funding Options since 2019, spearheading its transformation into a leading fintech with the launch of its Funding Cloud platform. Simon has over 27 years of experience in financial services, having held senior posts at some of the biggest players in the industry all over the world.

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