Debt awareness week Corona Virus Help Available
Julie Bickerdyke FCMA CGMA
Helping small businesses & charities create a finance strategy. Award Winning Outsourced Finance Director - NED - Chartered Management Accountant - FCMA CGMA. Chair - CIMA MiP Committee
This week marks National Debt Awareness week. From 23rd to 29th March, companies and charities alike are encouraging us to speak up about financial concerns and share knowledge.
In these strange and uncertain times more of us will have to take on debt just to survive the next few months. Hopefully, the government grants and low-cost loans will help businesses to return once they are allowed to operate again. I have tried to cover some of the main points below and I am happy to have a chat to anyone who is worried and needs guidance through these difficult times.
Here is the link to the government page of help available:
Rates related Grants
If you are eligible for a rates related grant your local authority will contact you.
Taxes
VAT payments have been deferred until June and this is automatic. You do not need to apply for this. Do continue to submit your returns in the meantime.
Self-assessment income tax payments due 31st July have all been automatically deferred to 31st January 2021.
If you are struggling to pay Corporation Tax or PAYE there is a dedicated government helpline:
0800 0159 559
Current guidance says that each case will be assessed on its merits for delaying payments due. It should be someone senior in the business who makes the call to this number, not an advisor. Government are asking that you do not phone now about tax that is due further into the future.
Loans
Below is my blog on different types of debt available to businesses, which was written before the crisis; but right now, the first option to look at has to be the government’s backed loan scheme, which is interest free for the first year.
The Business Interruption Loan Scheme will be available from Monday 23rd March. There is a maximum loan value of ￡5m
Here is the British Business Bank page with details:
Bear in mind that the debt remains your responsibility. The government backing enables companies to borrow that might otherwise be rejected for credit. The website guidance stated that:
If the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
The website also asks that businesses not in need of emergency funding yet do not apply immediately so the lenders can focus their efforts on those with emergency needs.
How to apply:
Full details are going to be available during the week.
If you are applying for a loan, as standard you will normally need to provide:
- Details of what the loan will be used for
- A business plan
- Minimum of 12 months forecast cashflow
- 2 years accounts (for established businesses)
- 3 months bank statements
- Proof of ID and credit reports for all directors
We do not yet know if this will change to make applications faster for businesses in distress.
Salaries – Job Retention Scheme
Help is going to be available for employers with 80% of salaries (up to ￡2500 per month) to be paid by the government for employees you would otherwise have to lay off. There is going to be an online portal to make your claims. You have to have treated employees as ‘furloughed’ to make a claim. For all things HR related I would recommend following the blog posts by Thrive Law and Jodie Hill as these are updated daily with the latest information. Jodie is regularly appearing on radio and news programmes each week (https://www.thrivelaw.co.uk/news/)
Thrive has a free corona virus related advice mailbox facility which you can access here: [email protected]
Help is also available for paying employees who are off sick.
Keep informed by following Jodie and Thrive on social media too
https://www.dhirubhai.net/in/jodie-hill-lawyer/
Sign up to their newsletter:
Self Employed
The only help we are aware of is under the Universal Credit or new style Employment and Support Allowance. Lobbying is taking place to encourage the government to provide for this sector.
Mortgage holiday
On a personal debt note most mortgage lenders are offering a 3month payment holiday. Zoe Ziegler of Ziegler Financial has been helping clients and reports that there are no lengthy application forms and this can be done online. You make a statement saying you have concerns around your income due to COVID 19 and you should be made the offer. The payment holiday will not affect your credit rating. This is subject to you not being in arrears already. The missing payments will be added to the mortgage total and that will be divided by the remaining term to establish the new repayment amount; at month 4 payments will begin again at a higher rate. See her post on Facebook:
https://www.facebook.com/zoe.ziegler.37
Mental Health
I hope you are all keeping safe and keeping sane. There is lots of advice available on looking after your mental health. I think the key thing is to keep in touch. I know I’m using zoom everyday to talk to clients, friends and family and actually see them on screen too. It’s helping so far. Who know what the effects will be longer term.
I would like to bring your attention to this site created by my client Sam Alexander, who has created an online community to look after one another. Check it out here:
https://santosharose.com/mental-health-in-a-world-turned-upside-down/
Original blog:
Debt is a huge issue. The word has negative connotations, yet it’s important to remember that there is certainly such a thing as good debt. If correctly secured, business debt can be a stepping-stone for growth. It can provide an opportunity for immediate cash for essential outgoings that, if properly understood and carefully managed, can drive profits and result in long-term success.
Conversely, bad debt often remains unspoken about. The impact on our businesses, cashflow and livelihoods can be misunderstood and the affect on our mental health and wellbeing is significant. Naturally, in the current global crisis, fears around our finances are even more prevalent.
With so much advice and a wealth of emotions around debt, it’s essential we feel equipped with knowledge of what to do and who to turn to manage our debt, both good and bad.
Types of debt: what is right for you?
There are multiple different types of debt. These include business and personal loans, grants, overdrafts, asset finance and equity funding. Each type depends on the reasons why and how you will acquire the debt, varying widely according to circumstance.
To decide which is right for you, you need to be clear where to find the best deals, how to secure the debt, and understand fully how and when it will be repaid. An experienced FD or accountant can step in to advise you on what debt is right for you, how to acquire it and put a clear plan in place so you know exactly what you need to do to repay it in full.
Unmanageable debt: can you get support?
Debt is a common concern for companies. For many, they’ve found themselves in a position where their outgoings exceed their income. If the funding secured for this was ill-managed and the debt not well-considered, this can cause problems. Costly start-ups, rapid expansion or trading troubles all contribute to a business needing to find alternative finances that, often, result in heavy debts.
For a business in this position, external advice is essential. Support will be objective, rational and logical and show you just what you need to do to repay monies without preventing further business growth. You can ask for support from an outsourced FD or accountant, as well as getting personal financial support from charities such as Step Change UK.
Business debt: will you secure funding for growth?
Business debt is not uncommon: owing money doesn’t prevent you from acquiring more. With the right support from an FD or an accountant, your finances will be assessed to uncover how repayments can be made in a sustainable way. This includes revealing potential cash rebates and advising on future claims.
What’s more, a forecast carefully planned and professionally prepared is exactly what you need to present to secure further monies. Projecting business change, including mitigating risk and planning best- and worst-case scenarios, is one of the things funders look for when receiving applications.
The pressure of debt can be overwhelming. The ethos around the term itself can be so negative that having any debt can be met with an embarrassment that serves only to make problems worse. The impact on our mental health and wellbeing is hugely detrimental. We need to talk, whether that’s professional support for companies or personal guidance for individuals, if things feel too tough to tackle.
For a business, outsourcing financial support from a part-time external FD or accountant helps you manage the burden without committing to a permanent team member that you may struggle to afford. Instead, expertise is on-hand only as and when you need it with advice that’s objective and fair.
Helping small businesses & charities create a finance strategy. Award Winning Outsourced Finance Director - NED - Chartered Management Accountant - FCMA CGMA. Chair - CIMA MiP Committee
4 年VAT update: If you are registered for VAT you must cancel your Direct Debit or payment will be taken. Thanks to Rhona Graham for spotting this
Helping small businesses & charities create a finance strategy. Award Winning Outsourced Finance Director - NED - Chartered Management Accountant - FCMA CGMA. Chair - CIMA MiP Committee
4 年Update on the furlough scheme & up to 80% rebate on salaries. I've heard that this will be based on February payroll and that the rebates won't come through until April.