No business income during the lockdowns
So has your business had no business income during the lockdowns?
Affected by Cotonavirus Covid-19?
HBG Advisory provides immediate Rescue Or Closure Options.
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Options available, having lost trade during the COVID-19 pandemic.
The UK Coronavirus lockdown made it difficult for companies to continue trading throughout 2020. However, 2021 has panned out the same, many companies continuing to face an uncertain future as the financial crisis throughout the world increases.
Having a business not generating currently any income since lockdown therefore raises issues on what can you do? Importantly. Seek professional qualified insolvency advice to establish if your company is solvent. If not, you then risk being accused of wrongful trading if you continue to trade when insolvent.
HBG Advisory is insolvency advisory specialists providing robust, impartial advice when your business has lost revenue during the lockdown and is therefore struggling due to the Coronavirus COVID-19 pandemic.
Sources of emergency finance when your business has no income
The UK chancellor of the exchequer, Rushi Sunak, introduced the significant Government-backed coronavirus loans:
- Coronavirus Business Interruption Loan (CBILS) and for more minor concerns;
- Bounce Back Loan (BBL) offered UK companies unprecedented financial support to enable your company to continue trading, even though you have no business income.
However, the schemes ended on March 31st 2021.
Since the end of the above schemes, many directors are however concerned about personal liability. Sadly, many companies have run out of working capital as lockdown extends throughout the UK and the World.
For further reading on the liquidation of your company and the bounce back loan, please consider reading:
No business income during the lockdowns – The Recovery Loans Scheme
The Recovery Loans Scheme replaced these schemes, providing companies of all sizes access to loans from £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts up to £10 m per business (Max £30 m for a group), with the UK government giving 80% security to the lender.
- Term loans and asset finance facilities are available from three months for up to six years;
- Overdrafts and invoice finance are available from three months for up to three years;
- Lenders can’t however take personal guarantees from borrowers for loans of £250,000 or less;
- Borrowers remain required to pay the costs of interest payments and fees;
- The effective annual rate of interest, upfront fee and other fees capped at 14.99%.
Source: The British Bank
However, the Recovery Loan Scheme provides the lender with a government-backed guarantee against the outstanding balance. Thus, the borrower always remains 100% liable for the debt but is never personally liable if it enters insolvency.
RLS commenced April 6th 2021, and scheduled to remain until December 31st 2021, though subject to review. It is available through many lenders whom the British Business Bank has accredited.
What to do if your application for RLS refused?
Lenders of an RLS have the authority however to decline applications.
You, though, may then attempt a further application with another accredited lender.
If your application fails altogether, then other finances are available to you and your business.
No business income during the lockdowns – Other Available Finance during the pandemic:
- Debt Finance:
- Overdrafts and lines of credit;
- Leasing and hire-purchase;
- Peer-to-peer lending;
- Direct lending funds;
- Export finance.
- Invoice financiers;
- Equity Finance and
- Asset-based lenders;
- Regional support.
Alternative funding is typically more flexible and swift to access than traditional loans. First, however, ensure you opt for the finance most suited to your company.
For further help on any of the above, please contact John Waller at HBG Advisory and read ‘available loans for business in the UK
Contacting your business insurers.
HBG Advisory have many company directors concerned about their insurers not providing cover for the effects of the Coronavirus COVID-19 pandemic.
Following the publication of the Supreme Court judgment in the ‘business interruption insurance test case‘ on January 15th 2021, therefore:
- Contact your insurance broker to make sure that you have a valid claim.
- Your insurer should have contacted you if you have an ongoing claim or complaint against a policy affected by the test case.
- The Financial Conduct Authority (FCA) outlined its expectations of insurers where valid claims under business interruption insurance policies are affected by the test case. Business owners and directors can find further information from the FCA regarding the test case process here.
- The test case however, does not apply to all business interruption insurance policies. The FCA published information on policies found by the High Court and Supreme Court to provide cover potentially. However, not all insurers were not part of the test case.
Additional UK government support for struggling UK businesses?
The government provided support for employees through the furlough scheme. The scheme therefore maintains the employment of those employees whose employer has no work directly related to the pandemic. The furlough scheme extends to September 30th 2021 currently.
Rishi Sunak has also allowed businesses and individuals negatively affected by Coronavirus to defer some tax payments, particularly VAT and self-assessment. For example, the deadline for VAT payments due from March 20th 2020 to June 30th 2020 is now the end of March 2022, and you may pay by instalments up to this date if you arrange this before June 21st 2021.
My business creditors are threatening legal action?
Suppose your creditors are pressing you for payment? However, they may attempt to wind your limited company up! Therefore, you may require additional support to protect your business!
Furthermore, it’s necessary to acquire robust professional support under these circumstances to protect you from wrongful trading and make an informed decision on the best options.
One of these options might be to enter company administration, for example, where creditor legal action stays for eight weeks-opening up several potential avenues, including formally restructuring your debts under a Company Voluntary Arrangement (CVA).
Other steps you may consider when there is no revenue during the lockdown.
Cutting your operating costs is essential to aid cashflow and talk to your business’ creditors to extend payment terms informally.
Having HMRC as a creditor allows you to open up negotiations to pay with a ‘Time to Pay’ (TTP) arrangement for any tax arrears. In addition, HMRC has eased their conditions for the scheme. For example, during the pandemic, allowing companies and individuals additional time to pay tax arrears without penalty, though interest charges remain. For further help dealing with HMRC, please read ‘HMRC debt management‘
Seeking professional help.
Obtaining advice from licensed insolvency practitioners (IPs) helps businesses with little or no business income since lockdown to take the proper steps. Importantly, it can protect company directors from accusations of wrongful trading and potentially personal liability.
It is essential that you understand directors duties and responsibilities, as not knowing is not a legitimate excuse.
HBG Advisory are insolvency advisory specialists with seasoned, experienced licensed insolvency practitioners offering diverse sector coverage in the UK.
The team at HBG Advisory provide clear, understandable insolvency advice to directors, clearly detailing the options applicable to each client. However, no matter what size your business is? You will receive the same robust support from HBG Advisory.
Please do not hesitate to contact our team to arrange a free same-day consultation in total confidence, without commitment. Contact details detailed below.