Chancellor Rishi Sunak has unveiled a £350bn finance package in the wake of the current pandemic, vowing that he would do ‘whatever it takes’ to see the UK through. But what does this mean for the hospitality industry? As part of their #UnitedWeStand campaign, proudly supported by Unilever Food Solutions, BigHospitality have published advice to help unravel the details – we extract some of the key headlines below.
The schemes explained:
The loan schemes, recently extended, are open to UK-based business as follows:
The Loan Schemes
- Small and medium-sized business with an annual turnover of less than £45m can apply for loans of up to £5m through the Coronavirus Business Interruption Loan Scheme (CBILS)
- Larger businesses with an annual turnover of between £45m and £500m can apply for loads of up to £25m through the new Coronavirus Large Business Interruption Loan Scheme (CLBILS)
The government will cover the first 12 month’s interest fees and guarantee 80% of the loan amount. However, it is important to be aware that the borrower will always remain 100% liable for the debt; the Scheme guarantee is to the lender, not the business.
How do businesses know if they are eligible for the schemes?
- Based in the UK, with annual turnovers as outlined above;
- Able to evidence viability
Banks will test viability of businesses applying for the schemes against their own risk assessment framework. More information can be found on the British Business Bank’s website. If businesses have concerns about their finances, they should contact their lender for support as early as possible.
What’s the expected uptake amongst hospitality businesses? What are they expected to be using the loan for?
Given the impact of the pandemic on the industry, the uptake for CBILS is expected to be strong. Loans can be used for asset finance, term loans or general working capital needs.
How do businesses apply for a loan?
The schemes are accessible through business’ normal points of contact with their banks and lenders.
What are the most important things to know about the loans?
- Loans under the scheme will be interest free and fee free for the first 12 months
- Businesses will not have to pay arrangement fees
- Interest will be payable after 12 months
- Lenders may require security for the loan facility
- It’s important to remember that the borrower will always remain 100% liable for the debt; the CBILS guarantee is to the lender, not the business
What do the grants available mean for the hospitality sector and how do businesses apply for these?
The government has announced that there will be extra provision for cash grants of up to £25,000 per business in the retail, hospitality and leisure sector. The amount a business is eligible for depends on their outlet property value. Grant funding will be provided by local authorities and businesses should contact theirs in the first instance. Further information is available on the government website.
What other crucial financial support elements have been announced to support businesses?
- £10,000 cash grant to the smallest businesses that pay little or no business rates and are eligible for small business rate relief (SBRR) or rural rate relief – they do not need to apply and will be contacted by their local authority
- A business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year
- Job retention scheme – HMRC will reimburse up to 80% of wages up to £2,500 per month
- Statutory Sick Pay (SSP) will be covered for companies with less than 250 employees
Click here to see the full article on BigHospitality and discover more about #UnitedWeStand.
Whilst we endeavour to ensure that the information provided is up to date and correct, this situation and the nature of the support available is changing rapidly. Please seek professional financial support if required, and consult the government website for the latest information.