Since March 2020, the government has announced a series of measures to help people cope with the financial fall-out of the coronavirus outbreak. As we’ve started lockdown 3.0, we want to keep you updated about all the financial support you’re currently entitled to - both for your hair, beauty or spa business and for you personally. We’ve rounded up the key points and will keep updating this blog based on the latest announcements.
- Support for people on PAYE
- Support for self-employed people
- Deferral of VAT payments
- Coronavirus Business Interruption Loan Scheme
- Coronavirus Bounce Back Loan
- 12-month business rate holiday
- Cash grants
- Help paying tax
- Six-month mortgage holiday
- Protection for renters
- Credit cards
- Sick pay
Support for people on PAYE
The government launched the Coronavirus Job Retention Scheme in March 2020 which involves the HMRC reimbursing 80% of the salary of furloughed workers. (These are employees who are not working but are furloughed during the Coronavirus crisis and kept on the payroll, rather than being laid off.) This will be worth up to a maximum of £2,500 a month.
It was announced on 21st December 2020 that the furlough scheme is being extended by another 4 months, due to finish at the end of April 2021. The government has confirmed that furloughed employees will continue to receive 80% of their monthly wages up to £2,500 but will start to ask companies to share the cost of the scheme. Employees who weren’t previously on furlough are now eligible and can work on a part-time basis with 100% of wages paid during working hours while the rest of their wages are paid on furlough. Find out more here.
Support if you’re self-employed
In March 2020, the government introduced the Self-Employed Income Support Scheme which has just been extended following lockdown 2.0. If you’ve had a loss of income thanks to COVID-19, you can receive a taxable grant worth 80% of your average monthly profits each available for three month periods. These are paid in a single instalment, capped at £7500 and due to end in January 2021. Stricter eligibility criteria has been put in place for the recently announced third grant, the most important one being a declaration that your business has by impacted by reduced demand due to Covid-19.
This scheme is open to self-employed people who were trading in the last financial year, are still trading now, and plan to continue doing so through to next year.
How to apply: You can open your new claim from November 30th 2020. HMRC will contact you directly and have recently confirmed that most people affected should now have been contacted. If you believe you are eligible and have not heard from them the HMRC advises you to go on their website and use the checker tool.
Once contacted you should be provided with a time to apply between Wednesday 13th and Monday 18th May. You will have to fill in an online form to make the claim via an eligibility checker and once confirmed they will pay the grant directly into your bank account. You’re likely to receive the grant, backdated for three months, any time from the 25th May onwards.
Other financial support for self-employed people includes:
- Access to Universal Credit at a rate equivalent to Statutory Sick Pay, which is currently £95.85 per week.
- Tax deferral - you’ll now pay your normal ‘on account’ July tax bill in January 2021.
“For small and medium-sized businesses, the Chancellor has announced temporary business interruption loans of up to £5million with no interest due for the first six months.”
Deferring of VAT payments
If you deferred VAT due between 20th March to June 2020, you now have the option of making smaller payments over a longer period. Instead of paying the full amount by the end of March 2021, you can now make smaller payments up to the end of March 2022, interest free.
Coronavirus Business Interruption Loan Scheme
For small and medium-sized businesses, the Chancellor has announced temporary business interruption loans of up to £5million with no interest due for the first six months. The money is aimed at helping businesses pay wages, rent and buy supplies.
How to apply: The Coronavirus Business Interruption Loan Scheme will come from the British Business Bank’s accredited lenders including high street banks. The British Business Bank advises, “In the first instance, businesses should approach their own provider – ideally via the lender’s website.” It is now due to end on March 31st 2021.
Coronavirus Bounce Back Loan
This scheme helps small and medium-sized businesses borrow between £2000 and up to 25% of their turnover. This scheme is open to applications until March 2021. If you already have a Bounce Back Loan, but have borrowed less than what you were entitled, you can top up your existing loan to your maximum amount.
Local Restrictions Support Grant
Following the latest lockdown announcement on January 4th 2021, the chancellor announced a one-off grant up to £9000 to support businesses forced to closed. The amount per received per property varies depending on the size of the business:
- £4000 for businesses with a rateable value of £15,000 or under
- £6000 for businesses with a rateable value between £15,000 and £51,000
- £9000 for businesses with a rateable value over £51,000
12-month business rates holiday
There will be a 12-month business rates holiday. This means the retail, hospitality and leisure industries won’t need to pay business rates for a year.
How to apply: You don’t need to do anything. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to take off the business rate charge.
Cash grants
Small companies in business premises with a rateable value (a measure of property values) between £15,000 and £51,000 can apply for grants of up to £25,000.
How to apply: You don’t have to do anything. Your local authority will write to you if you are eligible for this grant. Find out more here.
Smaller businesses that are currently eligible for Small Business Rate Relief (SBBR) can apply for a one-off cash grant of up to £10,000.
How to apply: You will be contacted by your local authority - you don’t need to apply. Find out more here.
Help paying tax
If you’re worried about being able to pay your tax because of the coronavirus pandemic, you’re advised to contact HMRC’s helpline on 0800 0159 559.
Six-month mortgage holiday
All banks should now offer you a six-month holiday from mortgage payments. This basically means deferring payments by six months if you are in financial difficulties arising from the coronavirus outbreak. This also means that for those offered a three-month mortgage holiday, you’re now granted an extra three.
Protection for renters
The government has announced emergency laws to protect private renters, including six-month notice periods and eviction suspensions from December 11th 2020- January 11th 2021 at the earliest. If an area is in a local lockdown that includes restrictions on gathering in homes, evictions can’t be enforced by bailiffs. The National Housing Federation has said they won’t evict tenants affected by coronavirus who fall behind on rent payments.
Universal Credit and Housing Benefit will also be increased so that the local housing allowance will cover at least 30% of the market rent in your area.
Credit cards
According to MoneySavingExpert, most banks and credit card firms have said they will allow emergency credit limit increases. Some will let you have repayment holidays and a few will waive fees for missed payments. Contact your credit card provider to find out what they can offer.
Sick pay
For employees… If you are employed, you are entitled to Statutory Sick Pay (SSP) from your first day off work, which can be up to £95.85 per week. You must earn at least £120 a week to be eligible for SSP.
For employers… The government will refund up to two weeks’ SSP for each eligible employee who has been off work because of COVID-19. The government says they’ll set up the repayment system for employers as soon as possible. Find out more here.
This page was last updated on 9th November 2020.
FAQs
An SBA-backed loan that helps businesses keep their workforce employed during the COVID-19 crisis.
Is PPP loan still available 2023? ›
Are PPP loans available in 2023. PPP loans are no longer available. The last PPP draw was in May 2021. However, existing borrowers might still be eligible for full loan forgiveness(principal and interest payments) through a loan forgiveness application.
What are COVID EIDL loans? ›
The COVID-19 Economic Injury Disaster Loan (EIDL) and EIDL Advance programs provide funding to help small businesses recover from the economic impacts of the COVID-19 pandemic. There are two types of COVID-19 EIDL funding: COVID-19 EIDL loan funds may be used for working capital and other normal operating expenses.
How do I get funding for my new business? ›
- Determine how much funding you'll need.
- Fund your business yourself with self-funding.
- Get venture capital from investors.
- Use crowdfunding to fund your business.
- Get a small business loan.
- Use Lender Match to find lenders who offer SBA-guaranteed loans.
- SBA investment programs.
Initial debt relief assistance
As a part of the CARES Act, SBA is authorized to pay six months of principal, interest, and any associated fees that borrowers owe for all 7(a), 504, and Microloans reported in regular servicing status (excluding Paycheck Protection Program loans).
What is the difference between SBA EIDL and PPP loan? ›
The EIDL loan is up to $2 million, so it's perhaps less money than the PPP, but the application is much more rigorous and consistent with typical SBA emergency loan standards. Note: The EIDL also comes with the opportunity to get a quick $10,000 advance feature. It will be forgiven if the loan application is denied.
What is the new PPP program 2023? ›
In 2023, the PPP Loan Forgiveness Program will be available to eligible borrowers. This program will forgive all or part of the loan balance for those who meet the criteria. The forgiveness will be based on a borrower's use of the funds for eligible expenses such as payroll, rent, and utilities.
Is it too late to apply for PPP? ›
There is no specific deadline for submitting the PPP loan forgiveness application, but businesses must apply for forgiveness within 10 months after the end of the covered period (either eight or 24 weeks after the loan is disbursed) if they want to avoid making loan payments.
Is there another SBA loan coming? ›
Currently, the SBA is not accepting new applications for PPP loans, and it is impossible to say if we will see another round of funding made available. However, whether you received a PPP loan or not, there are several business financing options available through Biz2Credit, like the term loan or merchant cash advance.
What is the easiest SBA loan to get? ›
SBA Express
This term loan or line of credit offers fixed or variable SBA loan rates as well as the easiest SBA application process, quick approval times, flexible terms, and lower down payment requirements than conventional loans.
SBA loans, such as 7(a) loans and COVID-19 EIDL loans, are backed by the U.S. government and issued by approved financial institutions. Under this program, the SBA agrees to reimburse the lender for a portion of your business debt if you default on the loan.
Who is eligible for the COVID EIDL loan? ›
Businesses and nonprofits, including sole proprietorship or self-employed small businesses owners with 500 or less employees • Credit scores 570+ • Businesses active or launched by January 2020 • Must be a US citizen or permanent resident. See FAQ Regarding COVID-19 EIDL for more details.
Can I get a business loan without revenue? ›
Some equipment financing lenders (though not all) are willing to work with startups. These lenders may have no minimum monthly revenue requirements and no minimum time in business requirements for applicants to satisfy. The collateral your business is purchasing secures the loan and reduces the risk for the lender.
How do I take over my business with no money? ›
How to Buy an Existing Business With No Money
- 1 – Consider the different types of business loans available for buying an existing business.
- 2 – Partner up with someone who has the money.
- 3 – Seek investment from venture capitalists.
- 4 – Use a lease-to-own arrangement.
- 5 – Work for equity in the company.
- Conclusion.
As I explained above, banks do lend money to startups. One exception to the rule is that the federal Small Business Administration (SBA) has programs that guarantee some portion of startup costs for new businesses so banks can lend them money with the government, reducing the banks' risk.
What is the Section 1112 payment relief? ›
Section 1112 of the CARES Act, as set forth in Pub. L. 116-136, authorizes SBA to pay, for a 6-month period, the principal, interest, and associated fees that Borrowers owe on covered 7(a) loans, 504 loans, and Microloans (hereafter “First Round Section 1112 Payments”).
What loans does the CARES Act apply to? ›
The CARES Act allows employers to pay up to $5,250 toward student loans on behalf of employees and the employees would not owe US federal income taxes on the payments.
How do I qualify for debt relief? ›
Debt relief qualifications
To qualify for National Debt Relief's settlement program, there are a few factors at play. You must owe more than $7,500 in debt and be at least several months behind on payments. You must also be able to make monthly payments to National Debt Relief at an agreed-upon rate.
Are you personally liable for an EIDL loan? ›
So if you expanded that loan and went over $200,000, you do have a personal guarantee attached to that loan. That means that you are personally liable to repay it. Even if the business closed, they could come back and have you personally be expected to pay that note off.
What happens with EIDL loan if business closes? ›
If you closed your business and have outstanding debt on a loan through the EIDL program of less than $25,000, there is little (if anything) the SBA can do to recover what you owe.
EIDL loans cannot be forgiven, but targeted EDIL Advances, Shuttered Venue Operators Grants, and certain other COVID-related grants can be forgiven. See if your business qualifies for EIDL forgiveness below.
Is PPP being funded again? ›
Unfortunately, PPP loans in 2022 aren't happening –– eligibility for the program ended in May 2021 and there are no signs of it coming back. There are other options for securing small business funding besides PPP loans. Read on to learn about your options for how to get the funding you need.
Will there be a third round of PPP loans? ›
A third round of Paycheck Protection Program (PPP) loans was authorized by the passage of H.R. 133: Consolidated Appropriations Act, 2021 into law on Dec. 27, 2020. Based on the CARES Act, the first-draw PPP loans were available for the lesser of $10 million or 2.5 times a company's average monthly payroll.
What is the name of the new PPP program? ›
Paycheck Protection Program 2.0: How to Apply for a New PPP Loan.
Can I get a PPP loan to start a business? ›
Anyone who uses a 1040 tax form is considered a sole proprietor of a small business, even if you have never formed an LLC or filled an incorporation status with your state. As such, your business could be covered by a PPP loan.
What is a loan forgiveness program? ›
If you qualify for forgiveness, cancellation, or discharge of the full amount of your loan, you are no longer obligated to make loan payments. If you qualify for forgiveness, cancellation, or discharge of only a portion of your loan, you are responsible for repaying the remaining balance.
How many PPP loans can you get? ›
If you or your business received an initial PPP loan, you may qualify for a second round of funding, provided you meet the following requirements: Have no more than 300 employees.
What is the $10000 SBA EIDL grant? ›
EIDL loans are fixed-rate low interest loans for small businesses impacted by the COVID-19 pandemic. As part of the EIDL program, businesses that apply can receive a forgivable $10,000 EIDL Advance Grant. EIDL loans offer 3.75% interest rates (2.75% for non-profits) and up to 30-year repayment terms.
What is the EIDL grant? ›
The Emergency Economic Injury Grants will provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first need to apply for an EIDL and then request the advance.
What credit score do you need for a SBA disaster loan? ›
While credit score isn't referenced as qualifying criteria for a Disaster Loan, there's a good chance that they'll still run a credit check during the approval process. To qualify for a traditional SBA loan, you must have a strong credit score—at least 600 for most banks.
Yes, it is possible to get a small business loan even if you have bad credit. This is because your credit score doesn't matter as much as the overall financial health of your business. Many lenders require a minimum credit score of 500, at least six months in business, and more than $30,000 in annual revenue.
Can you get an SBA loan with no money down? ›
Can you get an SBA loan without making a down payment? Yes, the SBA offers some loan programs that do not require a down payment, such as the SBA disaster loan program. Keep in mind that lenders that do not require a down payment will likely place more weight on your business plan and financial statements.
What credit score do you need for a business loan? ›
Banks generally require that you have good to excellent credit (score of 690 or higher), strong finances and at least two years in business to qualify for a loan. They'll likely require collateral and a personal guarantee as well.
Do you have to pay back SBA loan if business fails? ›
Several consequences result when your business defaults on an SBA loan. First, the lender will seek payment from the business for the outstanding balance of the loan. However, if the business cannot pay the full amount, the lender will foreclose on the collateral pledged by the business.
Can my SBA loan be forgiven? ›
A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan.
What is the average debt of a small business? ›
A 2021 survey by Statista found that 74% of small to mid-sized businesses in the United States carry some debt. The most recent data available from the Federal Reserve, published in 2017, puts the average small business loan in the US at $663,000. Some debt can be necessary for business success.
What is the limit for Covid Eidl? ›
Key Provisions of the COVID EIDL Program are the following:
Maximum amount: $2 million per business (beginning October 8, 2021), limited to $10 million for a corporate group. Loan term: 30 years. Interest rate: 3.75% fixed (2.75% for private non-profit organizations)
Can you pay yourself with a COVID EIDL loan? ›
Pay Yourself and Your Employees
Paying yourself is of the utmost importance. While EIDL funds cannot be used to make direct payments to owners, pay bonuses, or pay dividends to shareholders, EIDL funds can be used for payroll.
Can self employed apply for EIDL? ›
You are eligible to apply for an EIDL loan as an independent contractor or self-employed person.
What are the easiest loans to get approved for? ›
The easiest loans to get approved for are payday loans, car title loans, pawnshop loans and personal loans with no credit check. These types of loans offer quick funding and have minimal requirements, so they're available to people with bad credit. They're also very expensive in most cases.
Are There Loans That Accept An EIN Instead Of An SSN? Yes, individuals who are not eligible for an SSN can still get business loans using their EIN through some financial institutions. The process is usually just as easy as applying for a loan with your SSN.
Is it hard to get a business loan with no money? ›
Because many business lenders require prospective borrowers to meet minimum annual revenue requirements to qualify for a loan, it's typically challenging to secure a traditional business loan. However, some lenders willingly provide small business loans to startups with no current revenue.
What happens when a business has no cash? ›
A cash flow problem occurs when the amount of money flowing out of the company outweighs the cash coming in. This causes a lack of liquidity, which can inhibit your ability to make payments to suppliers, repay loans, pay your bills and run the business effectively.
What happens when your business runs out of money? ›
Running out of money means frustrated vendors.
Not having money to pay your vendors means you'll have to pay expensive penalties and high-interest rates. Or worse, they force you to pay in advance or even stop shipments altogether. This is when your cash problems become visible.
What is an SBA loan? ›
The SBA helps small businesses obtain needed credit by giving the government's guaranty to loans made by commercial lenders. The lender makes the loan and SBA will repay up to 85% of any loss in case of default. Since this is a bank loan, applications are submitted to the bank and loan payments are paid to the bank.
Which bank is best for a business loan? ›
Some of the Best Business Loan in India 2023
- HDFC Bank Business Loan.
- Axis Bank Business Loan.
- ICICI Bank Business Loan.
- Kotak Mahindra Bank Business Loan.
- IDFC First Bank Business Loan.
How to Approach Your Bank for Funding
- Prepare a cash flow forecast, and back it up with historical financial statements. ...
- Present yourself and your business well, this will also be reflected in your plans for any funding you receive. ...
- Produce a detailed (good) credit history. ...
- Show a track record of good money management.
SBA disaster loans can be used to repair or replace the following items damaged or destroyed in a declared disaster: real estate, personal property, machinery and equipment, and inventory and business assets.
What is the difference between SBA loan and SBA grant? ›
The biggest difference between a loan and a grant is that a loan must be repaid, and a grant does not. If you cannot repay funding, a grant may be the better option. Although this is the primary distinction between the two funding options, there are other differences small business owners should be aware of.
Are SBA loans government backed? ›
Lenders that work with SBA provide financial assistance to small businesses through government-backed loans.
If, or when, the business closes and defaults on the loan the SBA will move to seize business assets. For example, if your business owns a building, heavy machinery, or vehicles, the government will seek to seize these assets to satisfy the outstanding debt.
What happens if I don't pay back SBA disaster loan? ›
Your Business Assets Will Be Seized and Liquidated
They'll start by seizing the collateral you secured your loan against. In many cases, that means taking control of your business assets. After your lender seizes your assets, they'll liquidate them. In other words, your lender will put your assets up for sale.
Do SBA loans have to be paid back? ›
SBA loans are granted to small businesses to expand their operations via long- or short-term capital, asset purchases, or startup expenses. Small businesses receive loans from SBA partner lenders and the borrower is obligated to pay this lender back.
Who is eligible for the SBA disaster loan? ›
Who can use an SBA disaster loan? Businesses of all sizes located in declared disaster areas, private nonprofit organizations, homeowners, and renters affected by declared disasters, including civil unrest and natural disasters such as hurricanes, flooding, and wildfires.
What is the easiest loan to get approved for? ›
The easiest loans to get approved for are payday loans, car title loans, pawnshop loans and personal loans with no credit check. These types of loans offer quick funding and have minimal requirements, so they're available to people with bad credit.
What can a SBA loan not be used for? ›
“SBA-guaranteed loan proceeds may not be used to pay a creditor in a position to sustain a loss (including the same institution's debt). This includes any refinancing that will shift all or part of a potential loss from the original Lender to the SBA.”
Are SBA loans reported to IRS? ›
SBA 7(a) loans will be taxed like any other term loan the business has. The tax laws for reporting term loans are simpler than you might think. The IRS doesn't view loan proceeds as revenue. Because SBA 7(a) loans must be repaid within a certain term, the loan proceeds have no impact on the borrower's tax return.
Will they forgive SBA loans? ›
Business owners defaulting on their SBA loan can apply for loan forgiveness, but that does not guarantee the SBA will approve the request. It is more commonly referred to as an "offer in compromise". The SBA evaluates your case and discusses the matter with the lender.
Does the SBA actually loan money? ›
SBA only makes direct loans in the case of businesses and homeowners recovering from a declared disaster. SBA partners with lenders to help increase small business access to loans.
Do I have to pay off my SBA loan if I sell my business? ›
If you have an SBA loan, it's likely there is a loan covenant in your SBA agreement stating you shall not sell any of your business' fixed assets without paying off the loan balance.
The maximum loan amount for an SBA 7(a) loan is $5 million and the maximum repayment period is 25 years, though most loans carry a repayment term of up to 10 years.
How do I get out of a SBA loan? ›
You'll need to submit an offer in compromise to the SBA and provide evidence that you are unable to repay your loan. The offer you submit must be something you can reasonably repay and usually as a lump sum. Both your lender and the SBA must agree to the offer in compromise.
