England enters second national lockdown: What do small businesses need to know?
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England enters second national lockdown: What do small businesses need to know?

As England heads into its second national lockdown, ‘non-essential’ businesses such as pubs, restaurants, gyms, hotels and personal care facilities will be forced to close their doors again for at least four-weeks throughout November.

In a speech on Saturday October 31, Prime Minister Boris Johnson stated that “unless we act now, we will see more deaths than we did during the first lockdown in April”. However, for small business owners, many of which are still dealing with the impacts of the first national lockdown, these latest announcements mean many are facing the prospect of another incredibly challenging period.

Following confirmation of lockdown 2.0, the Chancellor Rishi Sunak pledged a new set of financial support measures for businesses, including an extension to the furlough scheme, as well as a further extension to the deadlines for the current programme of business support loans.

This came shortly after the Bank of England launched a £150bn stimulus package designed to boost consumer spending and lower borrowing costs to help struggling businesses and individuals.

Here, we outline the key support measures now available and look at how small businesses can best take advantage of them. 

Furlough extension

The government’s Coronavirus Job Retention Scheme (CJRS) was originally due to end on October 31, and instead be replaced by a new Job Support Scheme (JSS). However, following the news of a second lockdown in England, the government announced it would be extending its original furlough scheme until the end of March 2021.

This will once again see the government paying up to 80 per cent of furloughed employees’ normal wages up to a maximum of £2,500, with employers responsible for paying National Insurance contributions and pension contributions. It has also been confirmed that flexible furlough will still be available to allow employers to bring back furloughed employees on a part-time basis. To be eligible for the scheme, employees must have been on the payroll before October 30, but do not need to have used the furlough scheme before.

Extension to business support loans

Under new government plans to support businesses through the month-long lockdown, the four government-backed loan schemes will now be available until January 31. This includes the Coronavirus Business Interruption Loan scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), the Future Fund and finally the Bounce Back Loan Scheme (BBLS), which were all originally due to close to applications at the end of November.

The CBILS, which is available for both SMEs and larger firms, has now been extended until the end of January 2021. The scheme, which offers loans between £50,000 and £5milion has provided more than £17 billion in funding for more than 73,000 businesses so far. 

The BBLS, which launched to provide additional support for small businesses, offers loans of between £2,000 and £50,000 (capped at 25% of total turnover) and has so far been issued to over 1.33 million businesses. As part of the new support measures announced by the Chancellor, the government is now allowing businesses that haven’t already borrowed the maximum amount, to top up these loans.

Increased support for self-employed workers

Now in its third instalment, the latest Self-Employment Income Support Scheme (SSEIS) has again increased with workers now able to claim 80 per cent of their average trading profits. This has also been extended until Spring 2021.

In addition, the government has taken steps to ensure these grants will be paid faster than previously planned, with the claims window now opening on November 30, rather than December 14.

Will this support be enough?

The Federation of Small Businesses (FSB) recently stated that these ‘Second Wave Restrictions require a second wave of support for small businesses. With this backdrop, a recent report conducted by Simply Business found that almost 20% of UK SME’s believed that their business would not survive a second lockdown.

What would usually be one of the busiest periods of the year for many small businesses, will now be an incredibly uncertain one. However, if we took one thing from the first lockdown, it’s that many SME’s have the ability to quickly adapt their business model, whether that’s offering take away services or shifting to online sales.

The next four weeks will be a crucial period for the UK economy with the prospect of the traditional Christmas sales boom still hanging firmly in the balance. Only time will tell if businesses will be able to reopen on December 4, but it’s vital that SMEs continue to adapt their business models throughout November to adapt to this ‘new normal’ and don’t rely solely on lockdown being fully lifted in December.

If you’re looking for funding to invest in your business, then get in touch today to find out how a Capify Business Loan could help you.