Last updated: 4th November 2020
The coronavirus pandemic has caused serious, unprecedented issues across the business world, including in the food sector. In some ways, the food industry is uniquely affected as the demand for deliveries has increased. Nevertheless, the number of customers for restaurants, markets, pubs and food stores has significantly diminished and, as a result, numerous financial support opportunities from the UK government and independent bodies have emerged, all aiming to keep food businesses afloat.
We have already outlined the general business support available to food brands, so here we aim to focus specifically on collating the information currently available on financial support. There are a lot of details and instructions out there so, to make it easy, this guide will summarise and signpost you to what you need to know.
Financial Support From The Government
The UK government began to increase the financial support options available through March and April of 2020, with additional measures in the following months. The initial lockdown, beginning in March, was phased out and into new Local COVID alert levels, also known as the Tier system. It was announced at the end of October 2020 that England would enter a second lockdown with restrictions in line with the first lockdown and more severe than in the Tier system. As a result, new updates to financial support have been, and may continue to be, announced. Here is what has been made available so far.
Help For You To Pay Your Employees
You will want to be able to support your staff for as long as possible, even if your income has been reduced, either due to closure or reduced service options. There are a couple of ways in which the government is helping businesses retain and pay employees.
Coronavirus Sick Pay Scheme
The Coronavirus Statutory Sick Pay Rebate Scheme aims to support businesses who have employees who are off work due to coronavirus – either as a result of contraction or because they cannot work in self-isolation.
Employers are able to claim back sick pay, at the current rate of Statutory Sick Pay, for those employees off from 13th March 2020 onwards. You can only claim from the first qualifying day (the first day an employee usually works) that an employee is off sick, in accordance with the following dates and conditions:
From 13th March 2020 – if the employee has coronavirus, symptoms or was self-isolating because they live with someone who has coronavirus or symptoms.
From 16th April 2020 – if the employee was shielding due to coronavirus. Shielding means being told to self-isolate due to being at high risk, due to age or to existing conditions.
From 28th May 2020 – if the employee has been notified by a public health body or The NHS that they have come into contact with someone who has coronavirus.
Repayments will cover up to 2 weeks for all employees off due to coronavirus, be they full-time, part-time, or on flexible or fixed contacts.
There are a few restrictions, such as you must be on a PAYE payroll scheme (on or before 28th February 2020) and have fewer than 250 employees – which will apply to most small food businesses. You’ll need to keep records of coronavirus sick pay for each employee for HMRC.
There is no current end date for The Coronavirus Statutory Sick Pay Rebate Schemes so keep an eye on government websites for updates.
Coronavirus Job Retention Scheme (Furlough)
This scheme is a grant (meaning it does not have to be paid back) and allows you to claim back up to 80% of your employees’ pay if you have to place them on temporary leave, aka furlough. The employee will not be able to carry out any work for you during this time but will stay on your books.
Changes To Furlough
The Coronavirus Job Retention Scheme (CJRS) was extended at the end of October 2020 (when it was due to end) as England re-entered lockdown. It will last to December, with an end date to be confirmed later. Employees are eligible for the extension if they were on the ‘employer’s PAYE payroll by 23:59 30th October 2020‘.
The amount of support available through the CJRS will change over the coming months, in line with the expectation that employees will be returning to work. The current extension is from November 2020 to December 2020, the details of which are:
- Furloughed employees can receive up to 80% of wages, up to £2500 per month.
- Employers will only pay National Insurance Contributions (NICs) and pension contributions for the hours that the employee does not work.
- Employees can be furloughed full-time or part-time.
At the time of writing, details of how claims can be made have yet to be announced. Check back to the Government Furlough page for updates.
The previous furlough rules, which applied up to and including October 2020 were:
- Up to the end of July 2020 – The government will pay up to 80% of pay, up to £2500 per month, plus National Insurance and pension contributions.
- August 2020 – The government will pay up to 80% of pay, up to £2500 per month. Employers will pay Employer National Insurance (ER NIC) and pension contributions.
- September 2020 – The government will pay up to 70% of pay, up to £2187.50 per month. Employers will pay Employer National Insurance (ER NIC), pension contributions and 10% of wages to make up 80% cap of £2500.
- October 2020 – The government will pay up to 60% of pay, up to £1,875 per month. Employers will pay Employer National Insurance (ER NIC), pension contributions and 20% of wages to make up 80% cap of £2500.
Using the online calculator, you can check how much you or an employee will be able to claim for furlough.
Eligibility For CJRS
Both you as the employer and your employee will need to be eligible for furlough. The main requirements are that you have a PAYE payroll, be enrolled online on or before 23:59 on the 30th October 2020 and that you have a UK bank account. As with the coronavirus sick pay scheme, you can furlough staff on any kind of contract from full-time to agency or zero-hour contract. The only employees not eligible are those working on reduced hours or for reduced pay.
Employees cannot claim for themselves, the business must do this for them and then pay. Both businesses and employees will need to provide key identifying details, such as name and taxpayer references, and full details of who has been furloughed and for how long must be kept for HMRC.
The furlough scheme is open now for applications from businesses. Once HMRC has checked the claim is valid, the amount claimable should enter your business bank accounts within 6 working days. Employers had until 31st July 2020 to claim for furlough up to the 30th June. Details for the new furlough will be released soon.
Deferral Of Tax Payments
To help alleviate cash flow issues for food businesses, you will be able to defer some VAT payments and self assessment payments.
For VAT payments due between 20th March 2020 and 30th June 2020, you will be able to defer the payment to a later date – up to 31st March 2021. You won’t be charged any interest or penalties on deferred payments.
To be eligible for deferred VAT payments, you must be a UK VAT registered business and have a VAT payment due during the set period. The payments cannot be VAT MOSS or import VAT payments. Details of how these deferred payments will be made will be announced soon.
All VAT payments due from 30th June onwards must be paid as normal.
Self Assessment Payments
There are two payments owed for a tax bill, due on 31st January and 31st July each year. If you have an issue making the second payment due to coronavirus this year, you can choose to delay payment until 31st January 2021.
Those on self assessment who have lost income due to COVID-19 may be able to claim through a grant, the Self-employment Income Support Scheme, when it launches. HMRC will contact you if you are eligible.
Business Rates Relief
The UK government has announced a business rates holiday for retail, hospitality and leisure businesses. This covers most food businesses, whether you are a shop, restaurant, cafe or bar. This business rates relief is not one that you need to apply for, instead your local council will apply the discount if you are eligible.
The relief applies to any business rates bills which are due for the 2020 to 2021 tax year. Your local council may have to reissue your bill, taking into account the relief, and this may take a little time to come through. If you believe you qualify but do not receive the business rates relief in your new bill, you can contact your local authority.
Loans & Funds
To help food businesses weather this difficult time, there are a number of new funding options being made available, namely loans and funds. Some of these come from the government, others are government supported and some are fully independent.
Coronavirus Business Interruption Loan Scheme
The government’s Coronavirus Business Interruption Loan Scheme aims to support ‘small and medium-sized businesses affected by coronavirus’, with access to up to £5 million in financing, over up to 6 years.
It comes in a few different forms:
- Invoice Finance
- Asset Finance
In order to be eligible for this loan scheme, you will need to be a UK-based business with a turnover of £45 million or less. You’ll need to produce a borrowing proposal that is considered viable by the lender, if the coronavirus had not disrupted your business.
The scheme is delivered through commercial lenders and all major banks, and is backed by the British government who will guarantee up to 80% of the loans. Full details of how to apply are on the British Business Bank website.
The Coronavirus Future Fund
The coronavirus Future Fund won’t be right for most food businesses as it aims to support the most innovative companies with convertible loans – ‘a type of short-term debt that is converted into equity shares at a later date‘.
This fund will only be available to UK businesses that have been able to attract private or 3rd party investors in the last 5 years and raised at least £250,000 in equity investments. The scheme is open for applications until the 31st January 2021.
The Future Fund has been launched and includes a number of eligibility criteria related to investors and UK business setup. You can find out more and apply on the guidance page for The Future Fund.
Government & Independent Grants
Grants can be an important and viable way of sustaining your food business during COVID-19. Eligibility varies and some grants you will need to apply for, while others will be assessed by the grant provider.
Small Business Grants Fund
One of two announced government grant schemes, the Small Business Grants Fund (SBGF), is being assessed and delivered by local authorities. This fund is given to those businesses who are in receipt of Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR).
Depending on what your current property value is in relation to Business Rates, you could be given a grant of between £10,000 and £15,000. Information on grants, which are assigned based on property, can be found on each council’s website, a full list of which is compiled here.
Retail, Hospitality and Leisure Grant Fund (RHLGF)
The Retail, Hospitality and Leisure Grant Fund (RHLGF) is for businesses who are in receipt of the Expanded Retail Discount and have a rateable value of under £51,000. Grants will be made of £10,000 or £25,000 per property affected by coronavirus closure. This grant is not applicable to properties occupied for personal use.
The grant will be assessed and paid by local authorities and they will be in touch if your business is eligible for the grant.
Local Authority Discretionary Grants Fund
Many councils now have discretionary grants funds, aiming to support small businesses that had missed out on other grants – and the Local Authority Discretionary Grants Fund is not available to those in receipt of other grants.
Grants may be of £25,000, £10,000 or any amount under £10,000. Eligibility is restricted to those who:
- were trading on 11th March 2020
- are based in England
- have fewer than 50 employees
- have fixed building costs, such as rent
- have been adversely affected by COVID-19
Priority for this fund is going to small businesses in shared workspaces, bed and breakfasts and charity properties, but it is not exclusive to those groups. You can check if you are eligible and apply online here.
If you are not eligible for any government grants, or even if you are and need further financial assistance, then you should look for additional grant opportunities. There may be more independent grants available in your area, which you can find out about through council websites and business support groups. The Entrepreneur Handbook also has a good starting list for you to look through.
Local Funding & Fundraising
You may be able to secure local funding for your small food business, either from your community of customers and friends, or from independent financiers.
You can use business networking groups and websites to find out about opportunities for grants, loans and investment from businesses in your area. You may also want to look at fundraising within your community by setting up a GoFundMe or Crowdfunder campaign.
Some initiatives are available now.
Bounce Back Loan Scheme (BBLS)
This loan scheme aims to get financing for small businesses quickly. It is for small and medium-sized businesses who want to borrow between £2,000 and £50,000, and up to 25% of their turnover.
The UK government will guarantee 100% of the loan. No fees or interest will be applied to the loan for the first 12 months. After 12 months, an interest rate of 2.5% a year will be applied.
The loan is for 6 years but you can repay early without paying a fee. No repayments will be due in the first 12 months.
To apply, your business must be based in the UK, established before 1st March 2020 and have been ‘adversely impacted by the coronavirus’. This fund is unavailable to those claiming other funding, such Business Interruption Loans or Corporate Financing.
You can apply to one of the 11 lenders participating in this scheme via the government page for BBLS.
Financial Support From Other Revenue Sources
While financial support from the government is a hugely important avenue for food businesses during the coronavirus pandemic, you may be able to find that other revenue sources can help you navigate this tough time.
Paused / Reduced Rent For Restaurants, Bars, Shops
Currently, the UK government has offered some relief and advice to landlords for coping with coronavirus as many will be paying mortgages on properties which are rented out. Your landlord may be given a relief on payments which, the government has implied, they should pass on to tenants.
If you are renting a space then you should contact your landlord to discuss your situation and the possibility of deferred rent or a rent holiday. Some are offered pauses to payments or reduced rent for restaurants, bars, pubs and shops. If you have purchased your space, then you should speak to your mortgage provider to find out the options regarding reduced or delayed monthly payments during the coronavirus pandemic.
Pivot To Food Delivery
Pubs and restaurants will be able to, for the duration of COVID-19, switch to serving hot food takeaways without going through the usual planning permissions. This can help you maintain some financial stability but make sure you adhere to the food safety rules for takeaways & delivery.
Food Delivery Brand Support
Food delivery brands are flourishing during quarantine and doing what they can to support the food businesses, primarily restaurants and delivery-only kitchens, that are their core client base. One way in which they are helping food businesses more widely is by allowing convenience stores and shops to offer food delivery – though the UK government has made it clear that food brands who want to convert to food delivery can only sell hot food for food safety reasons.
When coronavirus first began affecting food businesses in the UK, Just Eat announced a 30-day emergency support package which consisted of a 30% rebate on commissions for Just Eat partners. This was in effect from 20th March to 19th April 2020. It is possible that they will announce additional support packages in the future, depending on how long COVID-19 and lockdown continues.
Deliveroo have lowered their onboarding fees, which may help to make signing up more financially viable for those restaurants and other food businesses who want to pivot to delivery. No other financial support has been announced for now.
However, Deliveroo have said that they have been struggling financially due to the lockdown, resulting in a new, proposed and preliminarily approved deal with Amazon – which could come with financial incentives down the line.
For the most part, Uber Eats has been supporting its clients by sharing key information and protection member Pro statues – which offers a few perks like cashback on fuel. They have also been funding meals and rides, via Uber, to NHS staff.
The initial fund for NHS meals has been used up, but there may be additional allocations, which could provide another revenue stream if staff choose to purchase through your business.
Struggling With Your Financials?
If you are struggling with your financials and are unsure what your best course of action is – which may change day to day and week to week as COVID-19 progresses – you should consider finding a financial advisor.
A financial advisor could be a local or freelance person with an understanding of how small businesses or food businesses operate. Check your local businesses and networking event websites, and search engines, to see if there are any offering free advice. You can also see if any advisors are listed on your local authority website. If you aren’t sure where to start, try UK Business Advisors who have a list of locals.
You could also speak to your accountant or bank to find out what your options are, especially if you are in debt. There are a couple of solutions that may help ease your financial issues: an amended debt payment plan or credit card payment freeze.
Debt Payment Plan
If you know you are going to have difficulty keeping up with repayments on debts or loans, you should first speak to your accountant to find out what your options might be. You can then approach your lender to find out what you can negotiate. You may be able to arrange a temporary pause or reduction in your debt payments.
Credit Card Payment Plan
You will need to speak to your bank or credit card provider if you are concerned about your ability or regularity to pay off credit. You may be able to delay payments for a set amount of time, but it will depend on the provider. The information on your provider’s website should give some indication of what they might be open to, be it a credit card payment freeze or reduction.
COVID-19 & Financial Support Options Will Develop
The coronavirus pandemic is ongoing and no-one quite knows when restrictions like the lockdown will be reduced or end. As a result, financial support plans are still being developed and new options are likely to appear as time goes on. Hopefully the above has given you some starting points for seeking financial support.
Bear in mind this information is subject to change and it is important you check regularly for further updates to schemes and financial support options for small and medium-sized food businesses, either on Foodstars’ blog or .gov sites.