Covid-19 Advice and Tips for Businesses

Advice and Tips to save your business during the Coronavirus epidemic

How you and your business can survive the Coronavirus outbreak

The guide to help your business stay afloat in these difficult times

The coronavirus outbreak poses an unprecedented challenge to businesses. Already, the pandemic has turned some small businesses upside down. Supply chains are being disrupted, and with more people self-isolating small to medium-sized businesses are having to juggle frightened employees, declines in sales-traffic and an uncertain future. 

As such, there are economic concerns for people: Will they be able to pay rent? Will they be able to feed their families? Will they have a job to go back to when all this is over? From a business perspective, these feelings are universal for leaders, managers and their staff.

This emotional context is important when thinking about how businesses and brands respond to coronavirus. Protecting your business during this pandemic is essential. It means you should prepare your business for the worst, keep your staff well-informed and of course, maintain cash-flow. 

In times of crisis, facing the unknown, having a plan can halve the stress. If you’re a young founder without a board, a chairman, or a senior team, the fear can be very real. So, whether you are a small-to-medium sized business, micro-company or corporation, here are 10 tips to save your business from the ill-effects of the Coronavirus outbreak.

1. Assess the state of your finances

At the top of any business owner’s mind should be: “how am I going to meet my outgoings?” This is a very difficult question to answer, and before you make any decisions moving forward you should take the following steps in order to assess the state of your business finances:

• Create a cash-flow budget listing with fixed versus variable costs. Fixed costs will generally keep the doors open and must be paid. 
• Create a list of priorities about which ones are most important and try to set money aside based on the timing of when they are due. 
• Analyse cuts to unnecessary costs that aren’t producing revenue or securing key business functions.

2. Keep your staff and fee earners working, if possible

If, as a business, you are able to continue operations, furloughing should be a last resort, so ensure your staff are able to continue working. This will ensure productivity and thus maintain some cash-flow. Use online software such as Google hangouts, Skype, GoTo Meeting or any such tool that is available to ensure that you are able to assign tasks. Use free packages such as Trello to assign tasks and ensure coordination within the business. 

However, be aware that if you are unable to maintain operations that to be eligible for the Job Retention Subsidy, when on furlough, an employee cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue. However, it is not yet clear how HMRC will know that a worker has been furloughed and not still actually working. We will provide more details once the government has clarified this. 

3. Claim government support for businesses

In response to the Coronavirus outbreak, the Chancellor unveiled a raft of measures designed to support a variety of businesses. If you are struggling to maintain business operations and thus cash flow, signing up to one of the following government schemes will help to alleviate financial burdens:

1. Support for businesses through the Coronavirus Job Retention Scheme:

• Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis.
• This applies to employees who have been asked to stop working, but who are being kept on the payroll, otherwise known as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant.
• The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March and is initially open for 3 months, but will be extended if necessary.

2. Support for self-employed through the Self-employment Income Support Scheme:

• The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).
• This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
• However, this is not the case if you are the director of a micro-business. More information can be found here.

3. Support for businesses through deferring VAT and Income Tax payments:

• The government has announced it will support businesses by deferring Valued Added Tax (VAT) payments for 3 months.
  • This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
• Income Tax payments due in July 2020 under the Self-Assessment system may be deferred until January 2021.
  • You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
  • The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.

4. Support for businesses who are paying sick pay to employees:

• The government has said it will bring forward legislation to allow small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
• this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
• employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020
• employers will be able to reclaim expenditure for any employee who has claimed SSP(according to the new eligibility criteria) as a result of COVID-19
• employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
• eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
• the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

5. Support for businesses that pay little or no business rates:

• The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
• You are eligible if:
• your business is based in England
• you are a business that occupies a property
• you are receiving small business rate relief or rural rate relief as of 11 March
• However, this support could exclude directors of micro-businesses. Due to the fact they work in serviced offices or from home

6. Support for businesses through the Coronavirus Business Interruption Loan Scheme:

• The temporary Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
• The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
• The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
• There are 40 accredited lenders able to offer the scheme, including all the major banks.

7. Support for larger firms through the COVID-19 Corporate Financing Facility:

• Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
• This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.
• It will also support corporate finance markets overall and ease the supply of credit to all firms.

8. Support for businesses paying tax: Time to Pay service:

• All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
• These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities
• You are eligible if your business:
• pays tax to the UK government
• has outstanding tax liabilities

4. Free advice from Acas

Before making any decision, consult with Acas. It is an independent public body that receives funding from the government. It provides free and impartial advice to employers, employees and their representatives on: employment rights. best practice and policies.

It has recently transformed its website to answer a range of questions asked by business owners. If you have a workplace problem you want to talk about, you can call the Acas helpline.

5. Apply for finance now

Experts have argued that the Coronavirus pandemic could last for up to six months. Therefore the need to plan ahead is more important than ever. As discussed, the Government has announced a loan guarantee scheme in which the banks should be more accommodating to help you. 

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller businesses (SMEs) across the UK that are losing revenue and seeing their cash flow disrupted, as a result of the COVID-19 outbreak.

The scheme is a part of a wider package of government support for UK businesses and employees. Read more at the Government’s Business Support website. 

British Business Bank operates CBILS via its accredited lenders. There are over 40 of these lenders currently working to provide finance.

A lender can provide up to £5 million in the form of:

• Term loans;
• Overdrafts;
• Invoice finance;
• Asset finance;
• CBILS gives the lender a government-backed guarantee for the loan repayments to encourage more lending;

The Big Four banks have agreed that they will not take personal guarantees as security for lending below £250,000.

At NextFin, we offer alternative finance, but you should first try your bank as the rate is likely to be higher. We offer a free eligibility search that does not leave a footprint on your business's credit history while offering access to a dedicated adviser who is there if you need help. 

6. Explore equity or crowdfunding to raise cash and leverage of the loyalty of your customers

If you really need to survive and don’t have the cash to get you through the hard times, then speak to your customers about the potential for them to hold a stake in your business. Here at Nextfin, we aggregate regulated equity and crowdfunding platforms and provide factual analysis, real-time data and ratings which help investors to make informed decisions about their prospect investment. 

Even in challenging times, investors, whether that be venture capital firms or business angels, will continue to invest in opportunities with good prospects over the long term. Albeit, they may be more selective with sector preferences. However, more so than ever, companies must be realistic about the valuation of their own business when engaging in such discussions.

7. Claiming on commercial insurance

Most commercial insurance policies are unlikely to cover pandemics or unspecified notifiable diseases, such as COVID-19.

However, businesses which have an insurance policy that covers government ordered closure and pandemics or government ordered closure and unspecified notifiable disease should be able to make a claim (subject to the terms and conditions of their policy).

Insurance policies differ significantly, so you should check the terms and conditions of your specific policy and contact your providers.

8. Applying for a Government grant

Small businesses and start-ups in the UK that have been affected by Coronavirus may be able to claim a £10,000 grant from the Government. 

This is part of a package of support for business recently announced by the Government and also includes the Coronavirus Business Interruption Loan Scheme, which offers loans, asset finance and invoice finance for businesses needing extra cash flow during the pandemic.

The Small Business Grant Fund (SGBF) is managed by local authorities and provides up to £10,000 as a one-off grant to help small business owners meet their operating costs. Only businesses in England are eligible for the SBGF and businesses can only claim once, even if they have multiple business premises.

9. Creditors and Debtors

Keep an eye on your debtors. Think who is going to be in trouble the most during this phase. Most retailers of any type will suffer during this crisis. Wholesalers should limit their credit lines immediately and review case by case. However, if you are a retailer that is doing well in this crisis be transparent with your suppliers, show them why and how you are going to survive. It's about communication.  

10. Diversify and sell hard

Can you deliver? For example, I own a share in a company called GoGetters. We get anything from retailers for the public within 30 mins, we operate in Herts and Essex. But we also have competitors, if you are a restaurant owner check out Deliveroo and Uber. They will put your menu online and deliver the food for you. Could you sell on Ebay or Amazon? Could you sell your service online with People per hour e.g. Fiverr? In the face of the Coronavirus crisis, try and diversify your business methods to adapt with the changing state of enterprise.

Disclaimer: To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional legal advice on any topic discussed.

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