The Coronavirus Job Retention Scheme (CJRS) has helped many businesses in the UK retain staff during the pandemic, providing vital support when many were unable to operate and some of those businesses continue to experience levels of financial distress as the coronavirus pandemic continues.
If you're a director in this situation and worried that you won't be able to pay staff when they return from furlough - what can you do? Are there any other government support initiatives that could help your business or should you try to secure additional funding from other sources to help support your business through these difficult times?
The Coronavirus Job Retention Scheme has been extended until the end of September 2021. This is to reduce the number of redundancies businesses have to make and to help support employers keeping staff on over the coming months.
The scheme will pay up to 80% of employee wages up to £2,500 a month. The government will cover the whole cost until July where employers will need to cover 10% of a furloughed staff's wages. This will increase to 20% in August and September.
A new Government backed loan scheme launched on 6 April to provide additional finance to those businesses that need it. Loans will be 80% government guaranteed with an interest rate cap. The Recovery Loan Scheme ('RLS') will ensure businesses can continue to benefit from Government guaranteed finance throughout 2021 to help protect jobs. All types of businesses can access these loans varying in size from £25,000 up to a maximum of £10 million. Invoice and asset finance is also available from £1,000.
This new scheme will run until 31 December 2021 and be administered by the British Business Bank with loans available through a diverse network of accredited commercial lenders. The RLS can be used as an additional loan on top of support already received from emergency schemes such as a the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme.
The deadline for applications for coronavirus business loans – the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) – was extended to 31st March 2021. These will then be replaced by the Recovery Loan Scheme which will be open for applications until the end of 2021.
Securing a traditional bank loan can be a lengthy process and might not be the right form of finance for your business. Alternative funding, on the other hand, may be more flexible and faster to access.
A successful application for alternative finance doesn’t always rely on a good credit record and there’s a range of options that can suit different types of business.
But what happens if you’re unable to pay your employees when they return from furlough and can’t access vital finance?
If your company is insolvent there are a number of business rescue options that could help your business to continue trading.
Company administration is a process that provides a respite from creditor pressure. It can help you put in place a plan for the future and potentially protect jobs. Another option might be a Company Voluntary Arrangement (CVA) whereby business debts are formally renegotiated with creditors. You continue to trade through your financial difficulties once the arrangement is in place but pay an affordable amount each month which is distributed as agreed with your creditors.
It’s crucial to be aware of your business's financial status when you can’t pay your staff, as your business may be insolvent. At McTear Williams & Wood we give clients all the facts, options and support to find the optimal solution for their company. From business rescue to the full range of insolvency options our qualified professionals will ensure the best outcome for your business.
Please contact one of the team on 0800 331 7417 to arrange a free initial consultation meeting