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Chancellor extends business interruption loan scheme and updates JRS guidance

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On 3 April, the chancellor announced an extension of the coronavirus business interruption loan scheme (CBILS) to maximise the support available for small businesses. In addition, a new large business scheme will provide support for larger firms not currently covered.

The CBILS is being extended to make all viable small businesses affected by Covid-19 eligible, not just those unable to secure regular commercial financing, and lenders will be banned from requesting personal guarantees on loans under £250,000. The chair of the House of Commons business, energy and industrial strategy committee, Rachel Reeves, wrote to the chancellor at the end of March expressing the committee’s concerns about the way the scheme was being rolled out.

The government has approved more than £90m of loans to nearly 1,000 SMEs under the scheme since its launch in March. However, according to the latest survey carried out by the British Chambers of Commerce (BCC) at the beginning of April, just 1% of firms had successfully accessed CBILS and 7% are receiving grants. While there is a high level of awareness of the government’s support schemes among businesses, the BCC suggests this is not translating into firms successfully accessing the schemes.

The new coronavirus large business interruption loan scheme (CLBILS), will provide a government guarantee of 80% to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m. The CBILS only covers SMEs with a turnover of up to £45m. The CLBILS is not yet available but is expected to launch before the end of April.

On 4 April, the government updated its guidance on the coronavirus job retention scheme (JRS), expanding and clarifying a number of points in the version first issued on 26 March, following the original announcement on 20 March.

The scheme will provide a grant to cover 80% of the regular wage costs of ‘furloughed’ employees up to a maximum of £2,500 per month, plus the associated employer NICs and minimum automatic enrolment employer pension contributions.

The updated guidance specifically confirms that individuals can be furloughed if they are ‘shielding’ in line with public health guidelines, cannot work from home and would otherwise be made redundant. Individuals with Covid-19 related caring responsibilities, such as childcare due to school closures, may also be furloughed.

More information is given on those individuals who are not employees, but for whom the grant can be claimed if they are paid via PAYE. These include:

  • office holders (including company directors);
  • salaried members of LLPs;
  • agency workers (including those employed by umbrella companies); and
  • ‘limb (b)’ workers (workers who are not also employees under Employment Rights Act 1996 s 230).

See Check if your employer can use the coronavirus job retention scheme and Claim for your employees’ wages through the coronavirus job retention scheme.

The European Commission has given state aid approval to these schemes under its temporary framework agreed for the Covid-19 outbreak.

Categories: News