If you work through your own limited company, you will no doubt have been disappointed to discover that the measures announced by the Chancellor last week for self-employed individuals do not apply to you.
However, the guidance for the use of the Self-Employed Income Support Scheme (SEISS) advises that there may be two further avenues of Government support open to you – the Coronavirus Jobs Retention Scheme (CJRS) and the Coronavirus Business Interruption Loans Scheme (CBIL).
Coronavirus Jobs Retention Scheme (CJRS)
The CJRS is open to all PAYE employees on the payroll on 28 February 2020 who have since been ‘furloughed’. This means that if pay yourself through PAYE and you designate yourself as ‘furloughed’, you will likely be eligible for a grant covering 80 per cent of your usual salary plus Employers’ National Insurance Contributions (NICs) and minimum employers’ automatic enrolment pension contributions.
However, being ‘furloughed’ means that you cannot undertake any of your employment duties, which may well be unfeasible if you are the only employee of the company. Moreover, the scheme is not expected to begin paying out until late April.
You should also bear in mind that it will not cover dividend income you would normally receive or any other performance-related pay you may receive.
Coronavirus Business Interruption Loans Scheme (CBILS)
The Coronavirus Business Interruption Loans Scheme (CBILS) is a potential option if you need funds to be able to pay yourself until the CJRS pays out in late April.
Facilities are available under CBILS £1,000 to £5 million, subject to a lender’s criteria. CBILS will be interest-free for the first 12 months, as the Government has guaranteed to cover these payments during this period.
CBILS may also be an option if accessing the CJRS is not appropriate in your circumstances.
- To access the scheme, decide which form of finance you require and identify which accredited lenders can offer it. This can be done by using the British Business Bank’s filter tool by clicking here.
- This filter allows you to put in the region where your business is based and the type of loan you require and will provide you with a list of suitable lenders.
- Research what each lender is offering via their website and decide how much funding you require.
- Collate all necessary information to make an application, including an up to date business plan, detailed management accounts and cash flow/financial forecasts.
- Make an application with your chosen lender that suits your requirements. The loan application process is likely to differ from lender to lender.
The British Business Bank has indicated that it may be beneficial to seek finance first through a lender that you have an existing relationship with.
Some lenders have advised that they may require personal guarantees from directors against any loans, although this cannot include your main residence.