The government support packages designed to help businesses through the coronavirus crisis are coming to an end over the next couple of months – is your business ready?
Back in April, as the realisation kicked in that lockdown was really going to impact jobs and businesses across all industries, the government announced a number of measures to help both business owners and employees, such as the Coronavirus Job Retention Scheme and Coronavirus Business Interruption Loan Scheme.
These schemes are coming to an end over the next couple of months though, so you’ll need to make sure your business is ready for the end of furlough payments or take advantage of any government-backed loans before they disappear for good.
When does the government furlough scheme end?
The government’s Coronavirus Job Retention Scheme – also known as the furlough scheme – is due to end on October 31, 2020, and it is now too late to put employees on furlough for the first time, unless they are returning from maternity or other family leave or serve as an armed forces reservist.
The Coronavirus Job Retention Scheme was brought in during lockdown to try and avoid mass redundancies as businesses had to close their doors for lockdown and could no longer afford to pay their employees. Under the terms of the scheme, the government pay 80% of all furloughed employees’ wages.
The scheme is costing the government £14 billion per month, which means if furlough payments continue at the same rate until the end of October, it will have cost a total of £69 billion. Although this sounds a lot (it is!) it’s still only half of the amount used to for the bail out of the banks in 2008 – that scheme that actually had £500 billion set aside but only £137 billion was used.
When does CBILS end?
The Coronavirus Business Interruption Loan Scheme (CBILS) is a government-backed loan scheme that is due to end at the end of September 2020, but the government has said there is no limit on the funds available for this scheme (money is provided by private lenders, and 80% backed by the government to help encourage lenders to offer favourable terms for businesses).
The scheme is available to businesses who meet the following conditions:
- Be UK-based,
- Have a turnover of no more than £45m per annum
- Generate more than 50% of its turnover from trading activity
- Operate within an eligible industrial sector – a small number of sectors are ineligible.
- Be considered viable over the longer term. Any coronavirus impacts over the short-to-medium term will be taken into account but won’t make your business ineligible.
Another condition is that all applications must be purely for business purposes and primarily to support trading in the UK.
When does the Bounce Back Loan Scheme end?
Brought in seemingly to help those businesses who had fallen through the cracks in CBILS, the Bounce Back Loan (BBL) scheme is set to end on November 4, 2020, but the government has the options of extending this.
Eligible businesses can apply for between £2,000 up to 25% of their turnover, up to a maximum of £50,000. The government will also cover the first year’s interest payments, and the annual APR is set at 2.6%.