Easier access to business interruption loans announced and HMRC VAT – cancel your direct debit
EASIER ACCESS TO BUSINESS INTERUPTION LOANS ANNOUNCED
The Chancellor Rishi Sunak is today taking further action to support firms affected by the coronavirus crisis by bolstering business interruption loans for small businesses and announcing a new scheme for larger companies. In a statement the Chancellor highlighted the following key points:-
- £90 million of business interruption loans approved for nearly 1,000 firms and £1.9 billion corporate finance provided to firms hit by COVID-19
- current loan scheme extended so more small businesses can benefit
- lenders banned from requesting personal guarantees on loans under £250,000
- new scheme announced to bolster support for larger firms not currently eligible for loans
- Chancellor emphasises importance of banks moving quickly to support the economy, jobs and businesses
More than £90 million of loans to nearly 1,000 small and medium sized firms have been approved under the government’s Coronavirus Business Interruption Loan Scheme (CBILS) since its launch last week. And a government-backed scheme to provide financing to larger companies, being operated by the Bank of England, has also provided almost £1.9 billion of support to firms and a further £1.6 billion has been committed.
To maximise the support available, the Chancellor is extending the CBILS so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating during this difficult time.
The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. The government will continue to cover the first twelve months of interest and fees.
The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will ensure that more firms are able to benefit from government-backed support during this difficult time. 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 between £45 million and £500 million. This will give banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.
Chancellor of the Exchequer, Rishi Sunak MP, said:
“We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country.
And now I am taking further action by extending our generous loan scheme so even more businesses can benefit. We have also listened to the concerns of some larger businesses affected by COVID-19 and are announcing new support so they can benefit too.
This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible.”
The Chancellor will be speaking to bank Chief Executives next week to discuss how the schemes are working and ensure everybody is playing their part.
HMRC VAT – CANCEL YOUR DIRECT DEBIT
All businesses should be aware by now that the Government have introduce a system of deferral of VAT payments, due to coronavirus (COVID-19), for VAT payments due between 20 March 2020 and 30 June 2020 to help businesses manage their cash flow.
For businesses with a UK vat registration and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to either defer the payment until a later date or pay the VAT due as normal. It does not cover VAT MOSS payments.
HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement, but you will still need to submit your VAT return.
If you choose to defer paying your VAT
If you choose to defer your VAT payment as a result of coronavirus (COVID-19), you must pay the VAT due on or before 31 March 2021. You do not need to tell HMRC that you are deferring your VAT payment.
Payments made by Direct Debit
If you normally pay by Direct Debit you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking.
After the VAT deferral ends
VAT payments due following the end of the deferral period will have to be paid as normal. Further information about how to repay the VAT you’ve deferred will be available soon.