What looked merely like another version of flu has turned into a global economic crisis the full impact of which has yet to be apprehended. Some industries, such as hospitality, have been hit much harder than others. The full impact of coronavirus strikes us particularly strongly when we hear global giants like Marriott International announce that not even WWII hit them as badly as COVID-19.
While some sectors like food, e-commerce and pharmacy have seen a spike in demand, others are taking different measures to cut expenses, optimise budgets and ensure business continuity. For many, however, tightening the belt won’t suffice – nor would it be the most effective strategy. According to a HBS study, companies that focus on cutting all costs during recession don’t do nearly as well after the crisis as do those who balanced cost-cutting to survive with investing to innovate and grow. Governments across the world have adopted different emergency measures to support businesses and individuals through these unprecedented challenges.
If you, too, are looking for support for your business at this time, here are several useful sources to begin with.
Businesses in the UK
The UK government has created a package of support measures that cover various business aspects from deferral of tax payments and support in covering employee-related costs (such as furloughed employees’ monthly wages, sick pay, NIC bill), to financial support in the shape of mortgage holidays, government-backed loans, and others. It has also adopted industry specific support measures for businesses in retail, hospitality and leisure.
Here are a few of those:
- Coronavirus Job Retention Scheme
All UK employers with a PAYE scheme that was created and started on or before 28 February 2020, can claim 80% of furloughed employees’ usual monthly wage costs (up to £2,500 a month), plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
- Tax Deferral
VAT bills due to be paid in April, May and June will be automatically deferred. You will have until 31 March 2021 to pay any liabilities that have accumulated during the deferral period. Similarly, businesses in financial distress can apply for additional support and deferral on other tax payments through HMRC’s Time To Pay service. This can be a very useful option to delay upcoming tax bills, such as Corporation Tax, VAT, PAYE, and keep higher liquidity in your business to tide you over the next few months.
- Coronavirus Business Interruption Loan Scheme
The scheme provides financial support for smaller businesses across the UK that are losing revenue, and seeing their cash flow disrupted due to the COVID-19 outbreak. It will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of £45 million – £500 million.
- Small Business Grant Scheme
The government will provide additional funding – a one-off grant of £10,000 – for local authorities to support small businesses that already pay little or no business rates. It is aimed at helping companies meet their ongoing business costs.
- COVID Corporate Financing Facility (CCFF)
Under CCFF, the Bank of England will buy short term debt from larger companies. This will apply to commercial papers with a maturity of no more than one year, issued by firms “making a material contribution to the UK economy”. More information on eligibility criteria and the procedure is available on the Bank of England website.
Useful sources on these and other support instruments:
- Government Business Support page
- COVID-19: guidance for employees, employers and businesses
- Bank of England
Businesses in the USA
In response to the dangers and challenges presented by the coronavirus crisis, the US government has adopted the CARES Act (the Coronavirus Aid, Relief, and Economic Security Act) – a federal stimulus package with a historic funding of $2.2 trillion.
Some of the most notable support measures for small businesses are:
- Paycheck Protection Program
With a dedicated $349 billion assigned, the program provides small businesses with funds to cover up to eight weeks of payroll costs including benefits, interest on mortgages, rent, and utilities. Small businesses with 500 employees or less are eligible if they meet the size standards outlined in the program.
- Economic Injury Disaster Loan Emergency Advance
Another option provided by the CARES Act, it provides small business owners impacted by COVID-19 with an opportunity to apply for an Economic Injury Disaster Loan advance of up to $10,000.
- Small Business Administration (SBA) Loan Forgiveness
Forgiveness of loan payments for most existing SBA loans for the next six months of loan payments.
- Families First Coronavirus Response Act (FFCRA)
The FFCRA provides businesses with fewer than 500 employees with funds for paid employee sick leave, family and medical leave for reasons related to COVID-19. Workers may receive up to 80 hours of paid sick leave and up to an additional ten weeks of paid family leave to care for a child. The FFCRA covers these costs by providing businesses with refundable tax credits.
Useful resources:
- SBA Small Business Guidance & Loan Resources
- SBA loan and debt relief options
- IRS information on tax relief and tax credits available
- The US Treasury
- Government support for small businesses
Businesses in Canada
The Canadian government has announced it is taking “strong action” to support local businesses. In order to provide immediate relief for businesses and entrepreneurs, it has introduced:
- Canada Emergency Business Account
This account is created to provide interest-free loans of up to $40,000 to small businesses and non-profits through their financial institutions. The program is expected to roll out in mid-April.
- Canada Emergency Wage Subsidy
In an attempt to prevent further COVID-related unemployment, the government has adopted the Canada Emergency Wage Subsidy to cover 75% of salaries for up to three months. Employers of all sizes and across all sectors of the economy are eligible. The subsidy equals 10% of the remuneration paid from March 18, 2020 to June 19, 2020. It can be up to $1,375 for each eligible employee and a maximum of $25,000 total per employer.
- Income Tax Deferral
Businesses will be allowed to defer income tax payments due on or after March 18 and before September 2020. Interest or penalties will not accumulate during this period.
- Business Credit Availability Program
The government has established a Business Credit Availability Program with $40 billion in direct lending and other types of financial support. The program includes Loan Guarantee for Small and Medium-Sized Enterprises (new operating credit and cash flow term loans of up to $6.25 million to SMEs provided through the Export Development Canada), and Co-Lending Program for Small and Medium-Sized Enterprises through which the Business Development Bank of Canada, together with other financial institutions will co-lend term loans to SMEs for their operational cash flow requirements.
More information on all the above-mentioned support measures is available on the Canadian government’s website dedicated to its COVID-19 Economic Response Plan.
Businesses in Australia
In a similar fashion, Australia, too, has adopted support measures for businesses in an effort to boost cash flow in businesses through this challenging period, as well as to avoid a major spike in unemployment levels.
Here are some useful support instruments available to business owners in Australia:
- JobKeeper Payment
A subsidy for salaries available to businesses impacted by the coronavirus. Employers can claim a fortnightly payment of $1,500 per eligible employee for a maximum of six months.
- Cash Flow Boosts
There is also temporary cash flow support created for small and medium size businesses through which the government will provide tax-free cash flow boosts of $20,000 – $100,000 to eligible businesses. The cash flow boosts will be executed through the Australian Taxation Office.
- Coronavirus SME Guarantee Scheme
In a coordinated action between the Australian government, Reserve Bank of Australia and the Australian Prudential Regulation Authority, the scheme will provide government guarantee to small and medium enterprise lenders for new unsecured loans to be used for working capital. Businesses with a turnover of up to $50 million are eligible.
- Backing Business Investment
This is a time-limited 15 month investment incentive that applies to eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021. Namely, businesses with a turnover below $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost.
More information is available on the government pages on
Wherever you are, there is support available. If you believe that might also come in the form of outsourced IT support to help you optimise your operations during these challenging times, let us know – we’d be happy to help.
