A Guide to How Small Companies in UK Can Survive Lockdown 3.0
The UK has entered its third lockdown in the last 12 months, leaving many business owners of newly set up companies and those that have been around for a longer time, unsure of what the future holds. According to some estimates, the effects of COVID-19 may end up costing UK small businesses a total of £65 BN—with around 234,000 small businesses having already closed for good.
Times are tough. If businesses are to survive, they need to make use of the special government lockdown grants available to them.
Fortunately, the Chancellor has just pledged an additional £4.6 billion worth of UK-wide lockdown grants available to small businesses, with local authorities also receiving an additional £1.1 billion worth of discretionary funding for this specific purpose.
Let’s examine which grants are out there and how to apply.
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The Kickstart Scheme
Summary: The scheme is designed to help find new job placements for 16 - 24 year-olds that are currently on Universal Credit (and potentially at risk of long-term unemployment).
Universal Credit is a payment to help with living costs.You may be able to get it if you're on a low income, out of work or you cannot work.
Designed to incentivise companies to hire young people who are currently without employment, the scheme is aimed at all businesses—regardless of their size or industry.
However, note that these are two separate schemes:
For fewer than 29 placements: The Kickstart Scheme Grant (for 29 or fewer placements)
For 30 or more placements: The Kickstart Scheme Grant (for 30 or more placements).
What you’ll receive: Successful applicants will receive a variety of benefits:
- £1,500 per placement. This is intended to cover any setup costs and ongoing employee support to help them develop their employability skills.
- 100% of the National Minimum Wage or National Living Wage (depending on the participant’s age) for 25 hours per week, for the first 6 months of them being employed.
- Any associated employer National Insurance contributions
Note: This funding comes from the Department for Work and Pensions, who will then send the funds to your local Kickstart gateway, where you’ll be able to access them.
Special conditions: There are several specific criteria to be aware of. First, the job placements are intended to be brand-new jobs—so you can’t use this scheme to fill existing or planned vacancies.
Moreover, you can’t use the scheme to cause existing employees, apprentices, or contractors on your books to lose out on work or reduce their hours.
The placements must also be for a minimum duration of 25 hours per week for 6 months in total You’re required to pay these employees at least the National Minimum Wage of the National Living Wage (depending on their age group).
The jobs themselves should only require basic training and should be geared around making these young people more employable going forward.
For example, you might help them:
- Update and improve their CV
- Practise interview scenarios
- Build a long-term career plan
- Goal-setting
- Develop skills within the workplace
How to apply: Simply head to your Kickstart gateway and provide them with your Companies House reference number, or Charity Commission number/Scottish Charity Regulator number (if applicable).
Then, you must specifically outline how these job placements are new and were specifically created for the scheme. Adopt an employee-first mindset here. Don’t simply say “We needed more hands on deck to improve our productivity. Instead, consider it from your employees’ perspective.
For example, you might state: “We wanted to leverage our in-house knowledge and expertise to transform the fortunes of young, out-of-work people in our area”.
You’ll also be expected to provide the Kickstart gateway with details regarding:
- The number of employees that you have.
- Any recent changes to your workforce in the last 6 months, how many people were affected, and why you made this decision (for example, why you decided to lay off staff or put them on furlough).
- The roles, functions, and average salary of all those affected by these recent changes.
- What recruitment processes you’ve started, completed, or paused in the last 6 months—and how similar these are to the Kickstart Scheme.
- If the job placements are indeed similar to existing or planned roles or replace work that would’ve otherwise been completed by those now working reduced hours, then you’ll have to explain why you’re using the Scheme to create similar roles.
Given that the Kickstart Scheme is intended to help young people become more employable going forward, you’ll have to also stipulate how you’ll support their career growth.
Therefore, the application process will ask for specific details on:
- The support you’ll be offering.
- How many hours you’ll be able to dedicate and when you’ll be providing this support to your employees.
- Who’ll be providing this support and how it’ll be monitored.
- The means with which those on the Scheme can provide feedback during their job placement—and how this feedback will be acted on.
Zoe’s manufacturing firm has transitioned into making PPE. She quickly realises that she can’t fulfil the growing demand, so she decides to hire an additional 35 people to work on the factory floor.
She applies for the Kickstart Scheme grant, highlighting that these are brand-new positions and that she plans on personally overseeing the young people’s development.
They’ll each work side by side with their mentor, who will provide ongoing advice and training. Most importantly, the mentor and mentee will meet once a week to work on a series of core skills: how to interview successfully, the art of writing a good CV, planning for the future, etc.
Having submitted her application, Zoe soon receives a confirmation email stating that her business has been accepted into the scheme.
The Coronavirus Local Restrictions Support Grant (Open Businesses)
Summary: All successful applicants will receive one cash grant from their local council for every 14-day period that they’ve been under lockdown restrictions. Local councils are in charge of picking and choosing which businesses will receive the grant based on the applications they receive.
What you’ll receive: The amount that businesses receive depends primarily on the rateable value of their property.
All businesses with a property that’s valued at £15,000 or less will receive a cash grant up to £467 per 14-day period since the beginning of lockdown.
If your property has a rateable value of between £15,000 - £51,00, this figure climbs to £700 per 14-day period—while it jumps to £1,050 if your property’s rateable value is above £51,000.
Special conditions: This grant is meant for all businesses that haven’t been required to close but that have still been severely impacted by the recent lockdown restrictions.
What’s more, while not being a regional grant per se, The Coronavirus Local Restrictions Support Grant is only applicable to businesses that are based in England. All businesses must have also been established before the introduction of the latest Coronavirus restrictions.
Your business will be ineligible if it’s in administration, insolvent, has been struck off Companies House, or has exceeded the allowable state aid threshold (in other words, if you’ve received more than €800,000 worth of state aid over the past three years).
How to apply: To begin the application process, simply head over to your local council’s website.
Pradeep has kept his London-based convenience store open throughout lockdown. However, with more people ordering food deliveries online, and fewer people coming in the door, the business has suffered.
He decides to apply for The Coronavirus Local Restrictions Support Grant for open businesses. His shop is deemed to be worth above the £51,000 threshold, so upon approval from the local council, he received £1,050 for every 14-day period that he’s been operating while under lockdown.
One-Off Support Grant
Summary: This one-off support grant applies to all businesses in the retail, leisure, and hospitality sectors that have had to close due to the latest lockdown. It’s estimated that around 600,000 businesses throughout the UK will be eligible for this grant.
What you will receive: There are three levels of support that applicable businesses will receive:
- A £4,000 grant for businesses with a rateable value of £15,000 or under
- A £6,000 grant for businesses whose rateable value is between £15,000 and £51,000
- A £9,000 grant for businesses that boast a rateable valued above £51,000
Special conditions: Only England-based businesses are eligible. Given that business support is officially a devolved policy, the Scottish government, Welsh government, and Northern Irish executive will be in charge of business support in their own regions—receiving £375 million, £227 million, and £127 million respectively.
How to apply: In order to begin the application process, simply head over to your local council’s website.
Abigail’s cafe has had to shut down due to lockdown, so she decides to check out the one-off support grant. The local council decided to give her a one-off grant of £9,00 as her business’s value is estimated to exceed £51,000.
Beyond Grants
Grants are great—however, they won’t paper over the cracks left by subpar accounting practices. Regardless of whether or not you end up receiving any grant money, your priority should be on making sure your business is being run as cost-effectively as possible.
Here are some tips.
Revisit Internal Practices
When life returns to normal, you won’t be able to rely on grants to help see you through tough times—so take this period of enforced lockdown to revisit your internal practices.
Cut Costs Where Necessary
Among a host of other similarly important factors, you need to cut costs where necessary, ensure you’re making the most out of your available deductions, and that you have a strong grasp over your cash flow.
Don’t Do Everything Yourself
Alternatively, you might not even have your accountant yet and are still relying on doing things yourself. This is far from the ideal scenario.
While business-owners are undoubtedly adept at juggling multiple priorities, they can’t simply expect to suddenly become expert accountants and bookkeepers. If this is you, make hiring an accountant your business's number one priority. This will save you a ton of time, effort, and headache down the line—while ensuring that you’re compliant at all times and operating in a financially savvy manner.
Ideally, you’d be able to benefit from much-needed accounting services as well as additional, ongoing advice and support. That’s where East river comes in. Not only will we handle all your accounting needs, but we’ll also be on-hand at all times to answer any of your queries or questions.
If you want to survive Lockdown 3.0 and thrive when all this is over, then you need to put rock-solid accounting practices at the centre of your small business.
