The Foreign Secretary Dominic Raab on Monday, 13 April quoted that “the UK has not yet reached the peak of the virus”. He further indicated that countrywide lockdown may be extended by 3 weeks more for which decision will be taken by end of this week. Further lockdown will question the survival of businesses within leisure industry. It has become imperative for owners and managers of these businesses to evaluate the sustainability. We at Affinity Associates have prepared a small list of measures that can be followed to survive during this pandemic.
Below 3 step process will help in taking right decision –
- Evaluating the loss of turnover during and after close down period. This can be achieved by estimating the loss in turnover per day (otherwise earned) by comparing it to historical data. A forecast need to be prepared keeping in mind that future revenues once the lockdown is over will also be minimal.
- Identification to be made between fixed costs and variable costs that can be avoided or curtailed. This step will help you to calculate the liquidity required for the business to survive. i.e. you will know your breakeven point.
- Once both above ‘projections and liquidity requirement is calculated, next step will be take advantage of government funding and support. There are various schemes and grants offered by the UK Government which are as below –
Coronavirus Job Retention Scheme – This scheme will help you to cover major fixed cost that any business will have. 80% of the wages (up to £2,500) along with 80% of Employer’s NI and pension costs will be reimbursed by HMRC for March, April and May 2020. Employers will need to pay salaries for all three months and then by end of April 2020 HMRC will update on process to obtain this relief.
Business rates relief – Your local council will forgo the rates for financial year 20/21. No application to be made.
VAT payments due between April 2020 and June 2020 are now deferred until March 2021. Thus liability can be settled anytime up to end of March 2021 and there will be no interest payable on due amounts.
Small Business Grants Fund (SBGF) and Retail, Hospitality and Leisure Grant Fund (RHLGF) – Government has further announced that Local authorities will provide grants to business based on their rateable value. Eligible businesses with a property that has a rateable value of up to and including £15,000 will receive a grant of £10,000 and with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000.
Further details can be found here.
Further an application can be made for Coronavirus Business Interruption Loan Scheme. This scheme helps small and medium-sized businesses affected by coronavirus (COVID-19) to access finance of up to £5 million. The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments. To check your eligibility and apply for loan please click here
Affinity Associates Limited is committed to provide advice and support that is required in sustaining your business. We provide impeccable service in evaluating business and preparing management information (including projections). Call now for consultation on 02089032077 or submit your request in contact us.