Nationwide Lockdown: What Does This Mean For Small Businesses
“We are telling cafes, pubs, bars and restaurants to close tonight… and not open tomorrow” were Boris Johnson’s words in Friday night’s conference, followed by instructions for gyms, leisure centres, cinemas and all other non-essential businesses to do the same.
Nationwide lockdown has come as a shock to some but a mere confirmation of “not if, when” for others.
Expected or otherwise, there are serious repercussions for the UK’s small businesses who have had to shut the doors to their customers and their income as a result of the pandemic.
These closures mean employees of non-essential businesses are being sent home or let go because these businesses are facing an immediate and total loss of income.
But given alongside this announcement were the details of various government financial support systems in an attempt to cushion the blow and prevent a wave of redundancies.
Wage Support For Small Businesses
To encourage businesses away from letting people go, funds will be made available to pay 80% of an employee’s wages up to £2500 per month.
This is the first time ever that the government has stepped in to help pay public wages.
The aid is available to all employers who contact HMRC to request a grant and the scheme will cover most of the wages of the people who would otherwise lose their jobs.
Currently the scheme is open for the next three months, though the government has stated that it will be extended if necessary.
This is an incredible opportunity for small businesses and their employees who are able to keep jobs that companies otherwise wouldn’t be able to fund.
Note though, this wage support doesn’t apply to people who are self-employed. So, what does this mean for the owners of these businesses?
Support For The Self Employed
As well as wage support for workers, the UK is making important adjustments to benefit those who are self-employed.
The UK is suspending the minimum income floor for self-employed people who are being affected by COVID-19, meaning that these people are granted access to universal credit that is equivalent to the statutory sick pay on offer for workers throughout the country.
In addition, the UK has suspended the next self-assessment payments for people who are self-employed until January 2021 in hope of giving people a financial cushion to weather the economic effects of the virus.
Loans For Small Businesses
Prior to Friday’s announcement, there were reports of businesses giving power to the people in order to help their businesses during the crisis.
Members of the public were being encouraged to make donations to their local businesses and keep supporting them if they could but since the closures, that’s off the table.
The government has stepped in and created the Coronavirus Business Interruption Loan Scheme (CBILS) which offers loans of up to £5 million for SMEs through the British Business Bank.
You are eligible to apply for this scheme if
Your business is UK-based and has an annual turnover of no more than £45 million
Your business meets the British Business Bank criteria
This scheme is available through 40 lenders throughout the country.
In this ever-changing climate it’s vital to keep up to date with what’s going on and how the government is working to help our small businesses.
The support systems discussed here are not the only options for small businesses. In fact, the UK has made available a huge amount of aid to help prevent the worst from happening.
You can find details of all the ways you can access support for your business on the GOV website’s Guidance for COVID-19: support for small businesses page.