What financial support is available to businesses?

Covid-19 | Covid-19 Advice | Financial Services | Reports | Sponsored
John Clarke
John Clarke, Head of Direct Sales, Wesleyan Bank

Cash flow is a hot topic in the wake of COVID-19. John Clarke, Head of Direct Sales, Wesleyan Bank, outlines the financial support available to businesses and the alternative funding solutions they can consider to aid their recovery.

CJRS extended until March

The Coronavirus Job Retention Scheme (CJRS), which was due to end on 31 October, has now been extended across the UK until 31 March 2021. The Government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more. In the meantime, the Job Support Scheme has been postponed.

As per before, the CJRS will pay up to 80% of a furloughed employee’s salary up to £2,500 a month with employers being liable for national insurance and pension contributions.

Cash flow support

The deadline for Bounce Back (BBL) and Coronavirus Business Interruption Loans (CBILS) applications has been extended from 30 November to 31 January 2021. If they wish, CBILS lenders can now offer borrowers more time to make their loan repayments, from six years to ten years, which will result in monthly payments being reduced by nearly half.

Despite the BBL and CBILS offering greater flexibility, it’s worth bearing in mind that these schemes have been an equal blessing and a curse as some lenders are focusing on these exclusively. As a result, some have withdrawn other financial products from sale and are struggling to cope with the influx of last-minute enquiries.

Investing in the future of your business

For all its disruption, COVID-19 has highlighted how embracing technology can give businesses the ability to deliver efficient client services and increase staff productivity.

For businesses planning to invest in assets, you should urgently take advantage of the  Annual Investment Allowance (AIA) to offset the cost of qualifying purchases against tax. From 1 January 2021, the AIA limit will reduce from £1m to £200,000, following a temporary increase introduced by the Government. Those looking to invest in qualifying expenditure could benefit from faster tax relief as the AIA allows a business to deduct the total amount of qualifying capital expenditure from its taxable profits in a given tax year. Most assets purchased for business use qualify, including IT investments, specialist equipment, furniture, flooring and lighting.

In addition, funding though an unsecured loan facility from a traditional high street lender or alternative finance provider can assist businesses in preserving cash flow. Asset finance loans enable the cost of refurbishments, premises relocations, as well as specialist equipment and technology to be spread over a period of one to five years.

While the weeks ahead remain uncertain for businesses, there are a plethora of government schemes and funding options available.

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