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How do businesses need to prepare for the ending of COVID financial aids?

Government support has been quintessential to supporting businesses throughout the COVID-19 pandemic.

With many of these schemes having closed already or facing an impending deadline, except for the Recovery Loan Scheme, businesses are having to find alternative solutions to combat any cash flow issues.

Firms have been taking advantage of government support for over and year and a half since the beginning of the pandemic in 2020 and with this becoming the new norm, it is not a simple task to prepare for complete financial independence once again

The UK government has shelled out over £100 billion on protecting jobs and businesses in the last 18 months and the schemes they have spent these on have been many firms’ salvation.

Careful and realistic planning will be a necessity as we enter the ‘recovery era’, as the business and financial worlds have become entirely different worlds pre- and post-pandemic.

Support schemes and when they end…

The Coronavirus Job Retention Scheme (the furlough scheme) has arguably been the most impactful of all financial support provided by the government. Giving grants to allow employers to keep their staff during the pandemic saved an enormous number of jobs nationwide. The total value of claims for the scheme was £37.5bn, as it gave employers the cashflow breathing room to retain their staff and carry on their operations without having to make drastic cuts and losses just to stay afloat.

Having ended on September 30 this year, many employers have found themselves having to rejig their finances completely, now having to pay 100% of their staff’s salaries once again – no small feat for any company.

The Coronavirus Business Interruption Loan Scheme (CBILS) was a support for businesses in the UK, having paid nearly £26.39 billion to nearly 110,000 firms in the UK by the time the Recovery Loan Scheme (RLS) was introduced. The sister scheme used for larger businesses, CLBILS, paid around £5.56 billion to 753 firms.  The CBILS scheme was introduced as a facility that remained interest-free for the first 12 months, and applications for the scheme ended in March 2021, with many firms having to start repayments in the months after (dependent on term and loan).

The government also introduced a reduced VAT rate of 5% from the pre-pandemic 20% to help keep the hospitality and tourism industry afloat. The rate increased to 12.5% later on in the pandemic and will now return to the pre-pandemic 20% as of March 2022.

A Business Rates Retail Discount was provided to retail properties as a measure of government financial support. This was expanded and applied to the hospitality and leisure sectors to further support their hardships, with the discount now lying at 66% and due to end on March 31, 2022.

The Self-Employed Income Support Scheme (SEISS) grant was put in place to protect the self-employed workers who have faced struggles throughout COVID-19. The fifth and final SEISS grant ended September 30, 2021. 

The Recovery Loan Scheme (RLS) has enabled businesses to borrow up to £10m per firm so far and is supported by the government, who guarantee 80% of finance for each facility and ensure there are no personal guarantees required for transactions under £250,000. While this facility was intended to close on the 31st of December, Rishi Sunak, Chancellor of the Exchequer, announced in the Autumn Budget on Wednesday that this has now been extended until June 2022, though the guarantee will fall to 70% after January 1, 2022.

Issues to keep an eye out for…

Many businesses are now finding themselves having to repay interest on their government-backed financial facilities from where there has been a year of interest-free payments.

With many businesses having taken out CBILS and other measures, they are now finding themselves in an unfamiliar position of not only having to pay for their usual business costs, but extra costs that may have appeared ‘free’ at the time.

With the inflation in gas prices, the shortage of drivers and the issues with supply chains and even a shortage of CO2, businesses are finding themselves in an even more unknown financial position than before. 

For those businesses that still haven’t fully recovered to their pre-Covid financial position, the timing of these repayments isn’t great and cashflow could be tighter than before the pandemic.

Despite a steady decrease in unemployment over the last couple of months, and a forecast two million less people out of a job this winter than anticipated according to the Office of Budget Responsibility (OBR) – unemployment still stands at 1.5 million.

That’s almost 200,000 more than prior to the pandemic.


The British Business Bank has introduced a Regional Angels Programme, a new angel investor scheme aiming to “help reduce regional imbalances in access to early-stage equity finance for smaller businesses across the UK”.

The programme has been provided with £150 million so far and will ensure young businesses across the UK will be granted access to the necessary finance to grow their companies.

A newly introduced investment relief will also support investment in property, allowing businesses to make improvements to their properties and not have to pay extra rates from 2023. This falls in line with the government’s push for net zero by 2050 and is hoped to encourage firms to adopt green and renewable energy and technology.

In a further push to encourage a greener Britain, on-site plant and machinery used for renewable energy will be exempt from business rates until 2035.

A 50% discount has also been provided to retail and hospitality businesses in tax – worth up to £110,000 per business for one year, excluding the largest retail chains and outlets.

Sunak has also pledged £500 million in government financial support to aid those leaving furlough or receiving universal credit to find work. Beginning in April 2022, the government will further its support to those already in work, providing access to work coach support with an emphasis on career progression advice.

The Chancellor will also be extending the Job Entry Target Support Scheme (JETS) until September 2022. Designed for those who have been out of a job for over three months, the scheme offers specialist advice on how people can change over into growing sectors with worker shortages.

The programme also provides CV and interview coaching, and having launched in October 2020, over £238 million has been invested to support those without a job due to COVID-19.

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