Over the past few days, the government has brought in an unprecedented number of measures. Many of these measures have the intent of keeping businesses afloat whilst allowing people to follow the government advice of staying at home.
Farming has been largely ‘business as usual’ and there has been a flurry of activity on the land now that the weather has turned for the better and things are feeling decidedly more spring-like (if even a little bit summery at times).
However, many farming businesses rely upon diversification projects for cashflow and there is uncertainty over the closure of many livestock markets and unusual fluctuations in prices. All of this could make the coming months quite challenging for some.
Coronavirus Business Interruption Loan Scheme and how it can help you
The Coronavirus Business Interruption Loan Scheme (CBILS) is available to businesses now.
It is a scheme which provides loans for businesses which are struggling in the current climate, up to a maximum of £5 million. The lender will be provided with a government backed guarantee for 80% of the value of the loan and the government will also pay any interest and fees for the first 12 months.
You should access this directly through your usual bank, a list of accredited lenders and partners can be found here:
Some lenders are saying that there will be no early repayment charges to SMEs, allowing businesses to repay the loans within 12 months, potentially with no lending charges during this period.
In order to qualify, the borrower must have a lending proposal which would be viable were it not for pressures placed upon the business directly as a result of the current COVID-19 pandemic. The lender must believe that the business can trade out of the difficulties once trading conditions return to normal. Any business structure can apply including sole traders and the self-employed.
Your first port of call to access this scheme is your current bank manager. However, should they turn you down, you can still approach other lenders within the scheme.
Coronavirus Job Retention Scheme and how it can help you
Another key tool on offer is the Coronavirus Job Retention Scheme.
Under this scheme all UK employers will be able to access a government grant for 80% of staff salaries, up to £2,500 per month, and this can be backdated to 1st March. The scheme is for staff who would otherwise have been made redundant through the impact of the COVID-19 pandemic. It is, as yet, currently unknown what evidence will be required to prove this. Employers can choose to top this up to 100% at their own expense.
To be eligible, employees must be paid via PAYE. Employers will pay them as usual and then reclaim 80% of the salary payment. To qualify, employees must be designated as ‘furloughed workers’ and notified of the change. This means that employees cannot work for your business during the period of furlough. This is perhaps only applicable to staff working on diversifications and rural businesses rather than working farms.
It is worth noting that the government advice regarding the Coronavirus Job Retention Scheme states ‘changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation’. This means that, unless there is a clause in their contract stating that you can reduce their salary, you are not strictly allowed to pay them only 80% of it.
Therefore, employees need to agree to being furloughed with a reduced salary and it is wise to get this in writing. It is unlikely that any employees will refuse under the current environment, as the alternative is redundancy. The Coronavirus Job Retention Scheme means that they will have a job to go back to when things begin to return to normal.
HMRC are currently working on a portal through which businesses will submit information about staff members who have been furloughed in order to be reimbursed.
Tax Self-Assessment Payments
Delays in self-assessment tax payments due in July 2020 have also been announced for the self-employed but, as yet, a scheme for the self-employed that can no longer trade due to the current restrictions is eagerly awaited by those affected.
We are hearing from customers that bank managers are being receptive to quick access to overdraft extensions, and discussions with landlords for tenant farmers about potentially delaying rent payments should also be considered if there is an immediate need for cash.