What’s New For Small Businesses This Week? – 23/10/2020

What’s New For Small Businesses This Week? – 23/10/2020

This week the Chancellor Rishi Sunak has announced a revised Job Support Scheme to help businesses affected by the new Covid-19 restrictions. Also, with Greater Manchester being moved into Tier 3 restrictions and other regions set to follow suit, we look at what this will mean for small businesses. Here is an at a glance look at the news you need to know:

  • Chancellor revises Job Support Scheme to increase financial support for businesses
  • Greater Manchester and South Yorkshire to move into Tier 3 restrictions
  • Wales to go into fire break lockdown to halt Covid-19 spread
  • Scottish Govt announces £40m aid for businesses hit by restrictions
  • Small businesses boosted by September spending
  • Investors sought to back energy friendly projects
  • Start-ups given financial support and advice from HM Land Registry

Chancellor revises Job Support Scheme to increase financial support for businesses

The Chancellor, Rishi Sunak, has announced a raft of changes to the Job Support Scheme (JSS) to help businesses affected by the new Covid-19 restrictions. Under the revised scheme, which is set to replace furlough in November, employers will pay less and staff can work fewer hours before they qualify, while the taxpayer subsidy has been doubled.

The aim is to help struggling firms that have not been made to shut. This follows increasing pressure from businesses in Tier 2 areas such as London and Birmingham for help from the government.

Instead of a minimum requirement of paying 55% of wages for a third of hours, as announced last month at the launch of the Winter Economic Plan, employers will now have to pay for a minimum of 20% of usual hours worked, and five percent of hours not worked. The government will also fund 62% of the wages for hours not worked, more than doubling the maximum payment to £1,541.75.

In the most generous case, the taxpayer will go from funding 22% of wages to just under half. The scheme is open to all businesses that can show an adverse effect on revenues.

The chancellor also announced specific help for hospitality and leisure businesses in Tier 2 areas. English councils will be given funds to distribute in the form of monthly grants of up to £2,100 to 150,000 hotels, restaurants and B&Bs. Devolved nations will be given the equivalent funding for other nations, under the Barnett Formula.

The self-employment scheme payment has also been doubled from 20% to 40% of profits, with a maximum grant of £3,750 a month. The changes to the JSS mean that employers are still obliged to establish whether they can continue to pay just over a fifth of usual employees for workers they wish to keep on.

Greater Manchester and South Yorkshire to move into Tier 3 restrictions

Greater Manchester will move to Tier 3 restrictions – the highest Covid-19 alert level – on Friday after discussions between local leaders and the government concluded on Wednesday without agreement. Infection rates in the area, which covers Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan, are among the highest in the country, up 302% at a weekly average of 1,591 in one month as of October 12.

The government has given Greater Manchester a £60 million package to support businesses and employees after protracted negotiations with local leaders.

South Yorkshire will also move into Tier 3 on Saturday, including the areas of Barnsley, Doncaster, Rotherham and Sheffield. The region will receive £41m in financial aid from the government.

For small businesses in these regions, the new restrictions means that:

  • All pubs and bars must close, unless they are serving substantial meals;
  • Betting shops, casinos, bingo halls, adult gaming centres and soft play areas will close

The government has also made it clear that after consultation with local authorities, it might decide to close other types of small businesses, such as leisure centres and gyms, performing arts venues and personal care services such as salons and barbershops. In Liverpool, the government has already announced the closure of leisure centres, gyms, casinos and betting shops.

Lancashire has ordered the closure of casinos, bingo halls, bookmakers and betting shops, adult gaming centres and soft play areas. Essential small businesses like supermarkets and restaurants are likely to remain open. However, they might still be affected by travel restrictions.

West Yorkshire, the North East, Teesside and Nottinghamshire are all in discussions with the government about imposing tighter restrictions.

Businesses that are told to close can also apply for:

  • Job Support Scheme – which has been expanded to protect jobs and support businesses forced to close their doors due to coronavirus restrictions;
  • Coronavirus Business Interruption Loan Scheme – which helps small and medium-sized businesses access loans and other kinds of finance of up to £5m;
  • Coronavirus Bounce Back Loan Scheme – which allows businesses to access finance quicker during this coronavirus outbreak (between £2,000 and up to 25% of your business turnover);
  • Local Restrictions Support Grant – which offers support for small businesses that were open as usual and providing services in-person to customers from their premises, but that were required to close due to local lockdown restrictions

Wales to go into fire break lockdown to halt Covid-19 spread

The First Minister has announced that Wales will go into a short, sharp national lockdown in order to curb the rise of Covid-19. Under the new fire break restrictions, residents will have to stay at home wherever possible from 6pm on Friday to November 9.

Those who cannot work from home will be allowed to travel to their workplace. The following businesses will be required to close:

  • Non-essential retail;
  • Tourism;
  • Hospitality (hospitality businesses can operate as takeaways only);
  • Leisure

The Welsh Government has announced that financial support will be available for the businesses affected by the lockdown. All firms that receive Small Business Rates Relief will be eligible for a grant of £1,000, and all firms ordered to close will be entitled to up to £5,000.

This financial aid will be administered in a similar way to the business rates grant funding firms accessed earlier in the year. The Welsh Government is currently finalising details of how this will be made available.

Businesses will also be eligible for support from the UK government during this period, such as the Job Retention Scheme, Job Support Scheme and self-employed income support scheme.

Scottish Govt announces £40m aid for businesses hit by restrictions

The Scottish Government has announced £40m in funding for businesses and employees affected by the temporary Covid-19 brake restrictions that came into force this month. The support funds will be administered by local authorities, providing one-off grants to hospitality and other businesses required to close under the new regulations.

 

Pubs and restaurants in Scotland’s central belt are to remain closed for a further week, First Minister Nicola Sturgeon has announced. Speaking at the Scottish Government’s daily virus briefing, the First Minister said the measures introduced at the beginning of October and intended to last for two weeks will now continue until November 2.

The business closure fund will operate as a two-tiered scheme:

  • A smaller grant of £2,000 for businesses with a Rateable Value (RV) of up to and including £51,000;
  • A larger grant of £3,000 for businesses with a RV of £51,001 or above, up to a maximum of £15,000 in total for any eligible business operating multiple premises

Local authorities will also take applications for a discretionary business hardship fund, with payments of £1,000 or £1,500, depending on V, up to a total of £10,000 for eligible businesses operating multiple premises. This fund will support some companies that can remain open but are directly affected by the restrictions, including those that supply businesses that must close.

To be eligible for the business closure fund, you must be a hospitality or other business required by law to close (except for takeaway) under the new restrictions.  For the discretionary business hardship fund, you must be:

  • A hospitality business or gym required by the regulations to operate in a restricted way;
  • A producer/wholesale business based in Scotland supplying primarily short-life goods or produce to hospitality businesses affected by the regulations. You must be able to show your turnover has dropped by at least 25% during the brake period;

To be eligible for either fund, your business must:

  • Have been open and trading before 9 October 2020;
  • Have a business bank account – this is the account your grant will be paid into if your application is successful;
  • Have premises registered for non-domestic rates. Businesses that pay rates through their landlords rather than directly to a council are eligible to apply (you must provide a copy of your lease agreement as evidence);

Applications are welcome from limited companies, sole traders, trusts and partnerships provided they meet the other criteria. If your business operates multiple premises, you can apply for grants for each premise, applying only once to the local authority in which your business is headquartered.

 

The maximum any business can receive will be restricted, regardless of the number of premises. The upper limit for the business closure fund is £15,000; the upper limit for business hardship fund is £10,000.

Small businesses boosted by September spending

Small businesses continued to grow in September thanks to a boost in consumer spending and an active housing market, according to the NatWest UK Small Business PMI. However, there was also a significant shortfall in output compared with pre-Covid-19 levels and a subsequent need to cut costs.

As a result, job losses continued to rise for the seventh-month in a row as the performance gap between small firms and large companies remained. On the flipside though, NatWest’s monthly survey revealed that some small companies showed a desire to retain skilled staff where possible as the pace of job cuts eased.

While respondents noted an uptick in business and consumer spending from the record downturn in spring because of the pandemic, small firms in the leisure and hospitality sectors experienced a slowdown in activity. This was due to tighter restrictions in trading as part localised lockdown rules, such as 10pm curfews and the end of the Eat Out to Help Out scheme in August.

The headline All-Sector Small Business Activity index climbed from 50.6 in August to 51.8 in September. The latest expansion was still softer than the recent 53.3 peak of activity in July.

Investors sought to back energy friendly projects

Investor partners looking to provide financial backing to innovative projects aimed at reducing energy use have been invited to take part in a new government competition. The Industrial Strategy Challenge Fund Transforming Foundation Industries Challenge, run by Innovate UK, part of UK Research and Innovation, is seeking partners to invest in businesses that carry out these projects and will be providing £7m in support.

Investors must identify promising SMEs in the foundation industries carrying out projects to reduce energy and resource use. Investment opportunities could include:

 

  • New investments for the organisation;
  • Opportunities currently under consideration;
  • SMEs already in a portfolio who are looking for further investment and grant funding for a specific project element

The businesses will be asked to submit funding applications for projects that meet the objectives of the challenge:

  • Reducing energy costs and optimisation such as heat or energy recovery and reuse;
  • Process measurement, optimisation and digitisation, such as sensor technology or digital tools;
  • Waste recycling, utilisation and symbiosis, such as reuse of waste or industrial symbiosis;
  • New product and service development, such as new materials, new materials-based products and services, or new business models

Investors could include venture capital, angel networks or corporate venture investors. They will be asked to make an investment that equals or exceeds the value of the Innovate UK grant.

Start-ups given financial support and advice from HM Land Registry

Four new start-ups have been provided access to financial support and expert advice through a HM Land Registry and Ordnance Survey scheme. Since 2015, the Geovation Programme has assisted 117 start-ups in introducing innovative digital products and services to their respective markets.

It has also helped them to raise more than £77m in third-party funding and create 484 new jobs. The Accelerator Programme is designed to propel pre-seed or seed stage start-ups, in the location and property industries, to the next level.

To mitigate the added challenges of Covid-19, the programme has adapted to ensure it continues to offer the next generation of digital businesses an all-encompassing package of support through remote digital solutions. This includes access to:

  • Up to £20,000 in grant funding;
  • High quality data from Ordnance Survey (OS), HM Land Registry and British Geological Survey;
  • Geospatial expertise from OS and land and property insight from HM Land Registry;
  • Business and strategy development capabilities;
  • A team of full stack developers to help build their proof of concept/minimum viable product;
  • Business mentorship and coaching from third-party professionals;
  • Hub space at Geovation London, as well as partner hubs in Cardiff, Bristol, Birmingham, Manchester and Edinburgh;
  • An extensive business network, including connection with investors and potential partners

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