On the 23rd of March, UK Prime Minister Boris Johnson announced the closure of non-essential shops and services as part of a lockdown. This has resulted in severe downward pressure on the economy. Latest figures reveal the economy contracting by 2% in the first quarter of 2020, the fastest since the financial crash of 2008. Amidst this economic halt, studies reveal that it is the smaller businesses that are the hardest hit.
The government has recognised the immense financial pressure on small business owners and unveiled loans and other schemes to help. Below is a summary of the financial aid available and their terms and conditions.
Coronavirus Job Retention Scheme – for help paying salaries
To avoid making your workers redundant in this economic slump, the furlough scheme is there to take some pressure off paying salaries. The government will pay 80% of salaries up to a monthly cap of £2,500 from March until thetill end of July. From August untiltill October, the employer will begin to make contributions to this 80% salaried pay.
More information and how to apply is given here.
Coronavirus Business Interruption Scheme – for borrowing up to £5 million
This scheme allows small and medium business owners to access loans and other finances up to £5 million. The government have guaranteed 80% of finance to the lender and will pay all fees/interest for the first year. Dependent on the kind of finance you apply for, the maximum length of the loan varies between 3 – 6 years.
You must show evidence that your business has been greatly impacted by the Ccoronavirus to be eligible. As this loan is for borrowing large sums of moneypayments, it is also vital to provide official evidence to show you can afford to make the repayments.
Full terms and conditions of this loan are covered here.
Coronavirus Bounce Back Loan – for borrowing up to £50,000
This loan is different to the Business Interruption Scheme, as it only goes up to £50,000 and is 100% government backed. The government have committed to pay interest for the first 12 months, meaning the borrower will pay nothing for the first year. After the first year, the interest rate is 2.5%. The loan length is 6 years, but the borrower may pay back early without a fee.
For more details on this loan, please see here.
Coronavirus Future Fund – bridge funding for innovative companies
This loan is for companies that have raised a minimum of £250,000 from third party investors in the last 5 years. The government will match 50% of bridge funding with another third party investor. Bridge funding is short term finance which a company can secure until a longer term finance option can be applied for. In this instance, this funding is 3 years.
The full terms and conditions of this loan is yet to be released, however an outline of the main terms is covered here.
Other help available
It is undeniably a time of great change and uncertainty. Financial pressure is presumably not the only sort of pressure people are feeling, with a reported spike of symptoms of depression and anxiety during this time. The NHS have created a list of ways to take care of mental health, with the top tip being to stay as connected as possible using technology.
For the whole list of NHS approved tips to look after your wellbeing, please see here.