This week marks National Debt Awareness week. From 23rd to 29th March, companies and charities alike are encouraging us to speak up about financial concerns and share knowledge.
In these strange and uncertain times, more of us will have to take on debt just to survive the next few months. Hopefully, the government grants and low-cost loans will help businesses to return once they can operate again. I have tried to cover some of the main points below and I am happy to have a chat to anyone who is worried and needs guidance through these difficult times.
Here is the link to the government page of help available:
If you are eligible for a rates-related grant, your local authority will contact you.
VAT payments have been deferred until June and this is automatic. You do not need to apply for this. Do continue to submit your returns in the meantime.
Self-assessment income tax payments due 31st July have all been automatically deferred to 31st January 2021.
If you are struggling to pay Corporation Tax or PAYE there is a dedicated government helpline:
0800 0159 559.
Current guidance says that each case will be assessed on its merits for delaying payments due. It should be someone senior in the business who makes the call to this number, not an advisor. The government are asking that you do not phone now about tax that is due further into the future.
Below is my blog on different types of debt available to businesses, which was written before the crisis. Yet right now, the first option to look at must be the government’s backed loan scheme, which is interest free for the first year. The Business Interruption Loan Scheme will be available from Monday 23rd March. There is a maximum loan value of £5m.
Here is the British Business Bank page with details:
Bear in mind that the debt remains your responsibility. The government backing enables companies to borrow that might otherwise be rejected for credit. The website guidance states that:
“If the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.”
The website also asks that businesses not in need of emergency funding yet do not apply immediately so the lenders can focus their efforts on those with emergency needs.
How to apply:
Full details are going to be available during the week.
If you are applying for a loan, as standard you will normally need to provide:
- Details of what the loan will be used for
- A business plan
- Minimum of 12 months forecast cashflow
- Two years’ accounts (for established businesses)
- Three months’ bank statements
- Proof of ID and credit reports for all directors.
We do not yet know if this will change to make applications faster for businesses in distress.
Salaries – Job Retention Scheme
Help is going to be available for employers with 80% of salaries (up to £2500 per month) to be paid by the government for employees you would otherwise have to lay off. There is going to be an online portal to make your claims. You must have treated employees as ‘furloughed’ to make a claim. Help is also available for paying employees who are off sick.
For all things HR related I would recommend following the blog posts by Thrive Law and Jodie Hill as these are updated daily with the latest information. Jodie is regularly appearing on radio and news programmes each week (https://www.thrivelaw.co.uk/news/). Thrive has a free coronavirus-related advice mailbox facility, which you can access here: firstname.lastname@example.org
Keep informed by following Jodie and Thrive Law on social media:
Or sign up to their newsletter:
For personal debt, most mortgage lenders are offering a three-month payment holiday. Zoe Ziegler of Ziegler Financial has been helping clients in this area. She reports that there are no lengthy application forms and the application can be done online. You make a statement saying you have concerns around your income due to COVID 19 and you should be made the offer.
The payment holiday will not affect your credit rating, though is subject to you not being in arrears already. The missing payments will be added to the mortgage total and that will be divided by the remaining term to establish the new repayment amount; at month four, payments will begin again at a higher rate. See her post on Facebook:
I hope you are all keeping safe and sane. There is a great deal of advice available around looking after your mental health. I think the key thing is to keep in touch. I know I’m using Zoom every day to talk to clients, friends and family. It’s helping so far. Who knows what the effects will be longer term?
I would like to bring your attention to this site created by my client Sam Alexander, who has built an online community that looks after one another. Check it out here: