Get ready for government coronavirus support ending
UPDATED November 3, 2020
The government support packages designed to help businesses through the coronavirus crisis and lockdown are coming to an end. This means that time is running out to apply for government-backed business finance, such as the Coronavirus Business Interruption Loans Scheme (CBILS) and the Bounce Back Loan (BBL) scheme.
The plug is also due to be pulled on the government’s furlough scheme - or Coronavirus Job Retention Scheme, to give it its proper title - which means you’ll need to start making provisions for paying employees to come back to work, if you’ve not already done so.
To find out more on government-backed business support, including how to apply, check out Bionic’s guide to business finance during coronavirus.
Here are all the dates you need to keep an eye on over the coming months.
When does the government’s coronavirus support end?
If you have any staff on furlough, or you’re considering a government-backed loan to help your business out of lockdown, here are the dates you need to look out for.
|Government scheme||End date||Deadline extended until|
|Coronavirus Business Interruption Loan Scheme (CBILS)||Wednesday, September 30, 2020||Monday, November 30, 2020|
|Coronavirus Large Business Interruption Loan Scheme (CLBILS)||Wednesday, September 30, 2020||Monday, November 30, 2020|
|Future Fund||Wednesday, September 30, 2020||Sunday, January 31, 2021|
|Coronavirus Job Retention Scheme (furlough)||Saturday, October 31, 2020||Extended until October 31, 2002. After that it will be replaced by the Job Support Scheme|
|Bounce Back Loan (BBL)||Friday, November 4, 2020||Sunday, January 31, 2021|
It's worth noting that the end date for CBILS, CLBILS, Future Fund and BBL is the last day on which you can apply for finance.
When does the furlough scheme end?
The government’s Coronavirus Job Retention Scheme - also known as the furlough scheme - was due to end on October 31, 2020 but has now been extended until December 2020 to support employers and employees through the country's second national lockdown.
This is the second extension the government has made to the shceme, which was originally due to end on June 30. The original four-month extension was put in place as it became apparent that the effects of lockdown would be more far-reaching than initially thought.
The scheme was introduced to help avoid a redundancy crisis across the UK - the concern being that those businesses who had to stop trading or work at a reduced capacity during lockdown would have to release staff as they could no longer afford to pay their wages.
The scheme pays 80% of employees’ wages, up to a maximum of £2,500 per month, and it became known as the ‘furlough scheme’ as the main eligibility criteria was that employers needed to classify employees as furloughed, meaning they remain on the payroll but can’t do any work during this time.
In a bid to help get staff back to work, the terms of the scheme changed from August 1, when furloughed workers were able to return to work part-time with employers being asked to pay a percentage towards the salaries of these furloughed staff.
When does furlough pay drop below 80%?
As of September 1, the government's contribution to the scheme will drop to 70% of employee wages, up to a maximum of £2,187.50, and this will be reduced again in October, when government contributions drop to 60%, up to a maximum of £1,875. When these government contributions drop, the onus falls to the employer to make up the shortfall in wages.
Please note - as part of the furlough extension for Lockdown 2, the scheme will once again pay 80% of employees’ wages, up to a maximum of £2,500 per month.
How to work out Job Retention Scheme claims with the September and October changes
If you're struggling to work out how much you need to claim back from the government, HMRC has set up a series of webinars where you will be taken you through examples and given all the information you need to claim.
To sign up to a webinar, follow this link - https://register.gotowebinar.com/rt/8528021499696163331?source=June-HMRC-Bionic
How much money has been spent on the Coronavirus Job Retention Scheme?
As of August 2, 2020, a total of 9.6 million jobs have been furloughed, meaning the Coronavirus Job Retention Scheme has so far paid out a total of £33.8 billion in claims. The scheme is expected to cost around £69 billion by the time it comes to an end in October.
How to apply for the Coronavirus Job Retention Scheme
Full details of how to claim for the extended furlough scheme can be found at the government website guidance page Claim for wages through the Coronavirus Job Retention Scheme.
What happens when furlough ends?
In theory, once the Coronavirus Job Retention Scheme ends, all employees should return to work on the same contract as before they were furloughed. To encourage employers to bring staff back to work, and avoid mass unemployment when the scheme ends, the government has offered businesses a bonus of £1,000 for every furloughed employee they keep on until the end of January 2021. To be eligible, any employees brought back to work must earn an average of at least £520 a month between November 2020 and January 2021.
As things stand, it's impossible to know exactly what will happen when the furlough scheme officially ends, not least because advice and rules concerning the virus and lockdown can change at a moment's notice - as the recent regional lockdowns and last-minute postponement of the further easing of lockdown rules have proven.
If any employees are made redundant, and they're entitled to redundancy pay, this must be calculated on pre-furlough wages, not the 80%, 70% or 60% of their salary they were claiming when they lost their job. Furlough money can't be used to subsidise any redundancy packages, and if you're made redundant while on furlough because your firm has gone bust, you can apply for payments from the Insolvency Service. To find out more, check out the government guide to furlough and redundancy.
The government has subsequently announced that when the furlough scheme ends on October 31, it will be replaced by the Job Support Scheme.
What is the Job Support Scheme?
The Job Support Scheme was due to run for six months from November and replace the Coronavirus Job Retention Scheme, which was due to end on October 31. The scheme has been suspended following the reintroduction of the furlough scheme, but will likely be introduced in December.
Similar to the government furlough scheme, the Job Support Scheme will see the government top up employee wages. But it will only support 'viable' jobs in which employees work at least one-third of their normal hours. Employers must pay full wages for the hours employees work and the government will then match this by paying another third of those employees' wages, so long as they remain in employment. Unfortunately, this means employees stand to lose a third of their normal monthly wage.
All SMEs are eligible, but larger businesses can only apply when their turnover has fallen as a result of the crisis
It is open to employers across UK, even if they’ve not previously used furlough scheme.
The government's Self-Employed Income Support Scheme will also be extended with similar conditions to the Jobs Support Scheme.
Businesses who utilise the Job Support Scheme will still be able to claim the Job Retention Bonus, which gives employers a £1,000 bonus for bringing workers back from furlough and keeping them in employment until the end of January 2021.
The scheme has also been extended to provide additional support for businesses and employees affected by stricter local lockdown regulations. The government will now pay two-thirds of the salary (67%), up to a maximum of £2,100 a month, of any employees working for businesses whose premises are legally required to shut for some period over winter as part of local or national restrictions.
To be eligible, employees must have been on the payroll before September 23, 2020, and can only claim if staff have been off work for a minimum of seven consecutive days.
Although employers won't have to contribute to their staff’s wages, they will need to cover National Insurance and pension contributions. And because the scheme doesn't begin until November, with payments being made in arrears in December, any businesses hit by local lockdown restrictions in October won't have any additional financial support for the remainder of the month.
How to apply for the Job Support Scheme
The scheme will be open from November 1, 2020 to April 30, 2021. Employers will be able to make a claim online through the government website from December 2020. Payments will be made in arrears on a monthly basis, meaning that claims can only be submitted in respect of a given pay period, after payment to employees have been made and have been reported to HMRC via an RTI return.
When does CBILS end?
The Coronavirus Business Interruption Loan Scheme (CBILS) was due to end on September 30, 2020, but the deadline for applications has been extended until November 30, 2020.
Remember, CBILS loans are provided by private lenders and, to help encourage lenders to offer preferable lending conditions, the UK government provides them with a guarantee for 80% of the loan. This means borrowers remain liable for 100% of the outstanding debt, and non-payment will affect your credit score and could lead to debt recovery action being taken against your business.
How much money has been spent on the Coronavirus Business Interruption Loan Scheme (CBILS)?
CBILS offered eligible businesses the opportunity to borrow from £50,001 to £250,000. As of August 2, there have been 119,248 CBILS applications, 58,595 of which have been approved at a cost of £13.08 billion.
How to apply for a CBILS loan
To apply for a CBILS loan, you'll need to approach an accredited lender before September 30th. You'll need to then give them the following details as part of the application:
- Management accounts
- Business plan
- Historic accounts
- Details of assets
It's worth noting that the government changed the CBILS eligibility criteria on July 30, 2020, meaning you can now apply (or reapply) for a CBILS loan, so long as your business meets the following conditions:
- It has fewer than 50 employees and an annual turnover of less than £9,000,000
- It’s not subject to collective insolvency procedure under national law
- It’s not in receipt of rescue aid (which has not been repaid) or restructuring aid (and still subject to a restructuring plan).
Get in touch with our business finance partners at Think Business Loans for a free CBILS eligibility check.
When does the Coronavirus Large Business Interruption Scheme end?
Introduced to help larger businesses who were ineligible for a CBILS loan, the Coronavirus Large Business Interruption Loan Scheme (CLBILS) was due to end on September 30, 2020, but the deadline for applications has been extended until November 30, 2020.
As with CBILS, CLBILS loans are provided by private lenders and the UK government provides them with guarantee for 80% of the loan. This means borrowers remain liable for 100% of the outstanding debt, and non-payment will affect your credit score and could lead to debt recovery action being taken against your business.
How much money has been spent on the Coronavirus Large Business Interruption Loan Scheme (CLBILS)?
CLBILS offered eligible businesses the opportunity to access loans and other kinds of finance up to £200 million. As of August 2, there have been 887 CLBILS applications, 482 of which have been approved at a cost of £3.27 billion.
How to apply for a CLBILS loan
To apply for a CLBILS loan, you'll need to approach an accredited lender before September 30th. You'll need to show that your business meets the following conditions as part of the application:
- It would be viable were it not for the pandemic
- It has been affected by coronavirus
- The loan will enable you to trade out of any short-term to medium-term difficulty resulting from coronavirus.
For more information, check out the government guide to applying for the coronavirus Large Business Interruption Loan Scheme.
When does the Bounce Back Loan (BBL) scheme end?
The government’s Bounce Back Loan (BBL) scheme was due to end on November 4, 2020, but the deadline for applications has been extended until November 30, 2020.
Designed to help businesses who were ineligible for CBILS, or struggled to meet the lending criteria, Bounce Back Loans are 100% backed by the government - meaning there is no risk to lenders - and the government will also cover the first year’s interest payments.
Although Bounce Back Loans are 100% government-backed, borrowers are still responsible for 100% of the outstanding debt, and non-payment will affect your credit score and could lead to debt recovery action being taken against your business.
What is 'Pay-as-you-Grow'?
‘Pay-as-you-Grow’ is an initiative that has been introduced to give businesses more time and greater flexibility to repay Bounce Back Loan. This means repayments can now be extended from six to ten years, which is expected to cut the average monthly repayment in half. Businesses that are struggling can make interest-only payments, while any business in real trouble can apply to defer payments for up to six months. No business taking up ‘Pay-as-you-Grow’ will see their credit rating affected as a result.
How much money has been spent on the Bounce Back Loan scheme?
Businesses can apply for between £2,000 up to 25% of their turnover, up to a maximum of £50,000. As of August 2, there have been 1,377,955 BBL applications, 1,135,575 of which have been approved at a cost of £34.34 billion.
How to apply for a Bounce Back Loan
To apply for a Bounce Back Loan, you'll need to approach an accredited lender before November 4th. You'll need to show that your business meets the following conditions as part of the application:
- It has been impacted by the coronavirus (COVID-19) pandemic
- It wasn't a business in difficulty as of December 31, 2019
- It was was established by March 1, 2020 and is engaged in trading or commercial activity in the UK
- It isn't using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF). If it is, then the Bounce Back Loan will have to be used to refinance the whole of the CBILS, CLBILS or CCFF facility
- It isn't bankrupt or in liquidation
- More than 50% of its income from its trading activity, unless it is a charity or further-education college.
To find an accredited lender, check out the list on the British Business Bank website.
When does the Future Fund scheme end?
The Future Fund scheme is open for applications until November 30, 2020, an extension to the original September 30, deadline.
The scheme was launched in May 2020 to help businesses that are reliant on equity funding and ineligible for other government business support programmes because they are either pre-revenue or pre-profit.
Although Future Fund loans are backed by the government, this is only to reduce the risk to lenders and borrowers are still responsible for 100% of the outstanding debt, and non-payment will affect your credit score and could lead to debt recovery action being taken against your business.
How much money has been spent on the Future Fund scheme?
These government-backed loans offered eligible UK-based companies the opportunity to borrow between £125,000 and £5 million, subject to at least equal match funding from private investors. As of August 2, there have been 830 Future Fund applications, 537 of which have been approved at a cost of £534.04 million.
How to apply for the Future Fund
For details on how to apply for financing from the Future Fund scheme, go to the British Business Bank website, remembering that you must apply before September 30th.
How Bionic can help you find the right business finance
It’s important to choose the financing option that offers the best fit for your business and its unique circumstances, and Bionic’s tech-enabled business finance team can help you find the right solution.
Go to Bionic’s business finance page to find out more about the various finance solutions open to your business, or give the team a call 0800 077 4116 to discuss your options.