- Coronavirus (COVID-19) in the UK
- Strategy Room: Moving forward. Together
- Coronavirus and you
- Coronavirus and business
- Coronavirus Corporate Guidance
- COVID-19 for Commercial Landlords and Tenants
- Pubs, bars, restaurants and takeaways
- Government support for your business
- Coronavirus and employers
- Coronavirus Webinars
Coronavirus Corporate Update
Updated 24th April 2020
As the UK’s Coronavirus lockdown is set to continue for at least three weeks, Corporate Partner Richard Robinson explores how the Chancellor’s schemes have fared and how businesses are engaging with some of the schemes on offer so far.
Through our COVID-19 hub you can find, amongst other things, guidance on what support is available to businesses, the impact of Coronavirus on M&A and what directors need to consider during this period.
The numbers so far
One of the largest overheads for many businesses – salaries – were quickly earmarked for government attention. The Government’s Job Retention Scheme introduced the word furloughing to a grateful business community, enabling the temporary lay-off of employees at the Government’s expense for up to 80% of salaries, up to a maximum of £2,500 a month.
At the time of writing is it estimated that 66% of eligible businesses are furloughing some or all of their workforce. The anticipated cost of the scheme for the Government, and in turn the taxpayer, is estimated to be £40 billion every three months but there is no doubt it has saved jobs and helped cashflow.
The figures speak for themselves. Furloughing has become the main weapon to preserve the workforce, save short term costs and protect business. Unlike in the banking crash of 2008 where the shorter working weeks and redundancy were the tools used to cut costs, the Job retention Scheme has avoided many firms making more difficult choices. It remains to be seen whether furlough is simply pushing back more difficult decisions but for now it’s a very welcome alternative.
The Coronavirus Business Interruption Loan Scheme (CBILS) is another much vaunted government initiative. Since its inception the streamlined loan scheme that provides Government backed loans through a range of approved providers, has been less successful than hoped. At present, approximately just 2% of smaller companies have successfully claimed a loan through the scheme, with a reported 53% of applications being rejected. With just £800 million already out the door from the panel of lenders, compared to the anticipated cost of the £350 billion for the entire UK Coronavirus bailout, there are questions about how effective this scheme will be – especially for vulnerable businesses such as those in the leisure sector for whom the funding may come too late. We are seeing many examples of applications being rejected, so it’s worth speaking to a debt advisory specialist about options before you apply if you have any doubts about your application and certainly if you are rejected.
We continue to support our clients through this difficult time through our varied commercial and private client services.
We encourage all employers to talk to our employment & HR team if you have questions on the furloughing scheme.
We are also on hand to help businesses that are feeling acute financial pressure and may need support in the context of debt restructuring and consolidation.
We also recognise that not all businesses will survive during this time and where appropriate, a conversation around insolvency and liquidation may be required. Those facing such difficulties should contact our Business Recovery Team.
However, just as importantly we have also begun planning for the upturn. Storms don’t last for ever – and like our clients we need to be ready for the world beyond COVID-19.