28 September 2020
What does the Winter Economy Plan mean for businesses?
On Thursday 24 September, the Chancellor Rishi Sunak has announced extra support for businesses as part of a Winter Economy Plan with the aim of boosting the economy. They include:
Coronavirus Loan Schemes
Rishi Sunak has announced that the application deadline for all coronavirus loan schemes has been extended to November 30. This includes the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. The government explains that: “This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.”
In addition, businesses which have borrowed under the 100 per cent guaranteed Bounce Back Loan Scheme, will be offered the option of more time and flexibility for their repayments. Under this new "pay as you grow" flexible repayment system, loans can be extended from six to ten years. Businesses which are struggling can choose to make interest-only payments, and those in trouble can apply for a payment holiday of up to six months.
The government will also allow Coronavirus Business Interruption Loan Scheme lenders to extend the length of loans from a maximum of six to ten years if it will help businesses to repay the loan.
For those that are self-employed and continue to trade but face a reduction in demand over the coming months, the Self Employed Income Support Scheme taxable grant will be extended with a payment that will cover three months of profits from November to the end of January 2021. According to the government, this is worth 20% of average monthly profits, up to a total of £1,875. People will be able to apply for a second grant to cover February to the end of April. Mr Sunak said credit ratings of businesses won't be affected.
The Chancellor has also announced that it will extend the 15% VAT cut for the tourism and hospitality industries until the end of March 2021.
In addition, up to 500,000 business who deferred their VAT bills be given the option of a New Payment Scheme, which enables them to pay back in smaller interest free instalments if they need to do so during the 2021-22 financial year.
These announcements come as the government launches a new Job Support Scheme, which will run for six months and support "viable jobs" by subsidising the salaries of employees who can work at least one third of their usual hours.
Dame Carolyn Fairbairn, CBI Director-General, said:
“Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.”
B P Collins’ corporate and commercial team has already helped clients in relation to funding. If you would like more information, or guidance, on options for sustaining and growing your business please contact partner Alex Zachary at firstname.lastname@example.org or 01753 279052.