What does today’s winter economy plan mean?
Seeking to find the balance between managing the Covid-19 virus and protecting the jobs and livelihoods of millions, the chancellor Rishi Sunak has today announced the government’s winter economy plan.
So, what will this mean for businesses and their ability to remain viable in such challenging circumstances?
Supporting businesses’ cash flow
It has now been confirmed that applications for Coronavirus loan schemes have been extended to 30th November 2020.
Those utilising the Bounce Back Loan Scheme will be given the option of extending their loan’s length from six years to ten years, which will result in monthly payments being reduced by nearly half. Businesses will also be able to access interest-only periods of up to six months and payment holidays as a result of the new ‘Pay as You Grow’ flexible repayment scheme.
Coronavirus Business Interruption Loan Scheme (CBILS) lenders can now offer borrowers more time to make their repayments, and the Self-Employed Income Support Scheme (SEISS) will cover 20% of average monthly trading profits via a government grant.
Businesses that had deferred their VAT payment earlier in the year will no longer be bound to paying a lump sum at the end of March 2021. Instead, businesses are now being offered the opportunity to split this payment into smaller, interest-free payments over the course of 11 months, which is expected to benefit up to half a million businesses.
“Practices that have taken out Bounce Back or Coronavirus Business Interruption Loans will now have more flexibility in when they repay which could help with cashflow as many adapt to the new business environment.” – Richard Ollive, Senior Financial Consultant, Wesleyan Financial Services
Announcement of the Job Support Scheme
The government’s furlough scheme - which will be ending on 31st October 2020 - is set to be replaced by the newly announced Job Support Scheme. Beginning on 1st November 2020, this support scheme will run for the next six months.
In a targeted attempt to keep employees within their roles - even if on shorter hours – this scheme provides additional support for both businesses and their employees in lieu of furlough.
Importantly, Rishi Sunak declared that the Job Support Scheme will be open to all businesses, even if they did not access the furlough scheme.
To be eligible, employees must work a minimum of 33% of their hours. These minimum hours will be paid by the employer, with a further third of the wage being paid by the government. The level of grant will be calculated based on an employee’s usual salary, with a cap of £697.92 per month.
All UK-SMEs are eligible, and it has been confirmed that businesses can access both the job support and the job retention schemes.
Given that a significant number of businesses are already experiencing or anticipating a decrease in demand during the winter period due to the pandemic, this scheme aims to offer continued support to businesses as they adapt and evolve to meet the challenges presented by the pandemic.
For a number of specialisms, including Dentists and General Practitioners, these support packages seek to offer the practical and financial support needed to protect their practices and retain their employees.
Reflecting on today’s announcement, Richard Ollive, Senior Financial Consultant, is cautiously optimistic regarding the law sector:
“The new Job Support Scheme (JSS) will help law firms continue to keep staff in their business and bring back those still on furlough – a move that will put practices in a strong position to service demand in the period ahead. However, the top-up provided through the JSS is capped, and won’t be as generous as the Coronavirus Job Retention Scheme so employees will need to carefully consider what this could mean for their income.”
How is today’s announcement likely to affect dentists?
Michael Copeland, senior area manager at Wesleyan Financial Services, anticipates a positive response from dental practitioners:
“The Chancellor’s new measures will be welcome news for dental practitioners, many of whom are struggling to recover from impact of lockdown. The Job Support Scheme announced today could help practices avoid redundancies and protect vital patient care services. It could also provide a further incentive for practices to bring back furloughed staff– supporting the profession’s efforts to resume a wider range of services.”
“Extensions to the repayment terms of Bounce Back Loans and Coronavirus Business Interruption Loans will also help practices as they can keep essential cash in their business for longer. Together, steps like these will support the sector’s ongoing recovery – so essential to the wider wellbeing of the nation.”
If you have any questions regarding the financial wellbeing of you or your business, your local Wesleyan Financial Services Consultant is available to offer support and guidance. To book your remote meeting, please click here or, alternatively, you can also call us on 0800 092 1990.