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Micro loan scheme ‘should arrive within a day of approval’

By Nikkie Thatcher

- Last updated on GMT

Support given: the Government has added to the existing loan schemes to help businesses amid the coronavirus pandemic
Support given: the Government has added to the existing loan schemes to help businesses amid the coronavirus pandemic

Related tags: Coronavirus

The Government has announced a new type of loan that pubs can apply for, worth a quarter of their turnover, up to a cap of £50,000, which is backed by the state.

The Bounce Back Loan will be available from next week (9am on Monday 4 May) and Chancellor Rishi Sunak confirmed, for most companies, the money should arrive within 24 hours.

Sunak said: “We are announcing a new micro loan scheme, providing a simple, quick, easy solution for those in need of smaller loans.

“Businesses will be able to apply for these new Bounce Back Loans for 25% of their turnover, up to a maximum of £50,000, with the Government paying the interest for the first 12 months.

“The economic secretary and I have been in close talks with the banks, and I’m pleased to say that these loans will be available from 9am next Monday.

“There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in.

“For most firms, loans should arrive within 24 hours of approval. And I have decided, for this specific scheme, the Government will support lending by guaranteeing, to the lender, 100% of the loan.”

British Beer & Pub Association (BBPA) chief executive Emma McClarkin said the loans would help some pubs, which was welcome, but only a minority.

Not viable

The financial help available to pubs from the Government:

Bounce Back Loan

Pubs will be able to apply for loans for 25% of turnover, backed by the Government from next week.

Coronavirus Business Interruption Loan Scheme

To be eligible, businesses must be UK-based with an annual turnover of no more than £45m and have a borrowing proposal which, if it wasn’t for the current pandemic, would be considered viable by the lender and, for which, the lender believes the provision of finance will enable the business to trade out of any short to medium-term difficulty.

The Government will make a business interruption payment to cover the first 12 months of interest payments and any lender-levied fees.

Coronavirus Large Business Interruption Loan Scheme

The Government-backed loan means firms with a turnover of more than £45m will now be able to apply for up to £25m of finance, and businesses with a turnover of up to £250m will be able to apply for up to £50m worth of finance.

Business rates

Chancellor of the Exchequer Rishi Sunak announced all pubs will benefit from a business rates holiday for the next 12 months, regardless of their rateable value on 17 March.

VAT

The Chancellor also announced the Government was deferring VAT for the next quarter.

Furlough scheme

The Coronavirus Job Retention Scheme was announced on Friday 20 March to ensure employers are given an alternative to placing staff on unpaid leave. The scheme is available to all UK businesses, so everybody in the industry will be eligible – so long as each is a UK business.

The online portal from HMRC is now up and running so employers can use this to enter employees’ details and receive the grant in the days that follow.

Once accepted by HMRC, employers will be reimbursed for 80% of the workers’ wages – up to a maximum of £2,500 a month.

Grants

When he revealed the business rates holiday, Sunak also announced pubs with a rateable value of under £51,000 would be eligible for grants.

The Government is offering grants of £25,000 for pubs with rateable values of between £15,001 and £51,000, and a £10,000 grant if the value is under £15,000.

Self-employed help

Self-employed operators will be able to have 80% of their monthly earnings covered by the Government, calculated by average profits over the past three financial years.

This scheme offers a maximum payment that is equivalent to £2,500 a month, the same as employed staff currently furloughed and those who receive the grant can continue to work or take on other employment, including voluntary work.

HMRC is aiming to contact those eligible by mid-May and will make payments by early June.

In the meantime, operators can apply for Universal Credit and receive up to a month’s advance without needing to physically attend a Jobcentre.

She added: “The reality is the measures announced won’t help the vast majority of pubs that, at present, are struggling to get access to the Coronavirus Business Interruption Loan Scheme.

“For many pubs, taking on debt in the form of a loan isn’t even a viable option. For those that do take out loans, it’s imperative they are given more time to pay them back to boost their chance of remaining open after Covid-19.

“With this announcement, the Government has forgotten there are still 10,000 pubs in the UK that aren’t getting any Government support at all because they aren’t eligible for grants.

“These pubs almost certainly won’t be eligible for the Bounce Back Loan either. They are without help. These pubs are viable businesses, they are the social hub that binds us all together. An investment in pubs now is an investment in the long-term future of communities across the UK.

“When this crisis is over, the first place many people will want to visit is their pub. Without further, specific support, these pubs and their communities are in jeopardy.”

UKHospitality chief executive Kate Nicholls also lauded the scheme but was wary about the debt it could bring.

Better access needed

She said: “Additional support for business is certainly welcome and fast-tracked loans with simple eligibility criteria.

“Too many businesses are being turned down for loans and many of those that have been successful have seen no money yet.

“We need much better access to loans where businesses want them, but we must also remember that, for some businesses, taking on more debt will not be the answer.”

The Wine & Spirit Trade Association also welcomed the new loan scheme but called for the Government to do more.

Chief executive Miles Beale added: “This new support announced today by the Government, whereby small businesses can apply for 100% Government-backed loans amounting to 25% of turnover up to £50,000 is welcome and may support the continued survival of businesses across the wine and spirit industry.

“However, as we have said before, much of the announced support amounts to loans that will need to be paid back. In this instance, a ceiling of £50,000 is low and the Government could have gone further.

“The burden of additional debt is particularly unattractive to businesses in the supply chain who are yet to enjoy the Government support afforded to other hospitality businesses in the form of grants, but for whom, just like pubs, bars and restaurants, sales have been reduced to zero, practically overnight.

“We have been clear that what these businesses need is for the Government to recognise their value in the same way they have other parts of the hospitality sector. It may well be the case these businesses will be the last to be permitted to reopen.

“And, even when they are allowed to begin trading again, it is likely they will still be forced to operate at reduced capacity or be tightly restricted. This impact will be felt just as much by businesses in the supply chain.

“The Government must extend business rates exemption and availability of Government grants to businesses in the on-trade supply chain, by broadening its definition of hospitality to include them. This would represent a much more supportive measure.

“The Government must recognise that persisting with such a narrow definition of hospitality is harmful – there will be no hospitality sector without the businesses that keep pubs, bars and restaurants stocked.”

Related topics: Legislation

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