Government support for business - a developing situation
Normally I would be writing and commenting about last week's budget, but that has been superseded by the extraordinary events of the last few days.
The advice to the population not to go out to pubs, restaurants, theatres etc is not only going to have a short-term catastrophic effect on those industries, but the shock-waves will undoubtedly spread to many other parts of the economy. People running businesses are understandably worried about what this might mean for them, and whether they will survive.
In these times it is even more important to keep a cool head and not panic. There will be an end to this, and normality will be restored in due course.The government has made it clear from yesterday's announcement that they are prepared to provide financial support to business to ensure that Covid-19 does not result in business closures.
So what exactly is the government offering?
- Business rates holiday for 12 months for all retail, hospitality and leisure businesses.
- Grants of £10,000 (up from £3,000 in the budget) to all small businesses eligible for Small Business Rate Relief.
- Grants of £25,000 for businesses in retail and hospitality sector operating from premises rated between £15,000 and £51,000.
- Government guaranteed loans of up to £5 million from the Coronavirus Business Interruption Loan Scheme with the first six months interest-free.
- In addition to this there will be the ability to defer payment of taxes such as VAT, corporation tax and PAYE for affected businesses, presumably without penalty. Mortgage lenders will also be supporting customers with repayment holidays of up to three months.
We do not know exactly how this is going to work, and all will be subject to change as the situation develops. It seems likely that some support will be routed through the high street banks and some through local councils.
What is clear is that the Government are committed to protecting businesses WHATEVER THE COST. It should be clearer within days exactly how support can be accessed.
Cash flow will be crucial over the next few weeks. Salaries will be due for payment at the end of next week.The Government know this so we should expect a lot more clarity within days.
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