If you own an SME, a free cash grant would usually have been welcomed as a wonderful surprise but under the circumstances of the Coronavirus pandemic - it might not feel like it.
First announced in the Budget on 11th March, the format of direct cash grants for SMEs takes two distinct forms.
The Small Business Grants Fund (SBGF) will service businesses with a rateable value of £15,000 or under. They will receive a cash grant of £10,000.
The SBGF also applies to businesses receiving Rural Rates Relief - these are the key local businesses such pubs or post offices in rural locations of less than 3,000 people.
The Retail, Hospitality and Leisure Grant Fund (RHLGF) will go to those with a rateable value of £15,001 or higher up to a value of £51,000. They will receive a £25,000 grant.
Charities whose rateable bills are already zero thanks to local discretionary awards are also eligible for the RHLG.
No business can receive the SBGF or the RHLG for the same property - because you know some people would ask.
Both grants are designed to be paid quickly so local authorities have been tasked with administering payment through a similar mechanism to how they collect business rates payments.
Rather than try to duplicate or recreate the mechanism on a national scale, the government thought it was easier to use the systems already in place and allow local authorities to distribute the monies.
The monies have started being distributed as from the end of March, and the grants are being paid automatically into the bank accounts that pay the rates, by the local authorities.
During the Coronavirus pandemic local authorities will have access to Spotlight - the Government Grants Management Function and Counter Fraud Function’s digital assurance tool which allows them to quickly complete due diligence checks on large numbers of eligible grant recipients and provide risked outputs based on previous interactions and existing intelligence held about them.
As with every similar situation, there will be exceptions to the rules which could see some companies losing out.
Businesses which function using space that’s occupied for personal uses such as car parks and parking spaces; private stables and loose boxes for horses; beach huts and boat moorings are excluded.
As are businesses that are in liquidation as of 11th March 2020 or were dissolved at the time are also ineligible.
The guidance explicitly acknowledges the risk of “deliberate manipulation and fraud” stating that any business caught falsifying their records to gain additional grant money will face prosecution and any funding issued in error will be subject to claw back mechanisms.
The scheme is being supplemented with a top-up discretionary fund specifically aimed at small businesses who paid council tax, not business rates, and previously missed out on grants.
Local authorities themselves will have autonomy and discretion to award grants up to £10,000 but will look to prioritise businesses working in shared spaces, regular market traders and small charity properties that would meet the criteria for small business rates relief along with bed and breakfast owners.
These are trying times for every director or business owner.
Your business plan for the year might be turned on its head and your profitability and expansion goals revised down to mere survival - although this in itself might be a great achievement.
We get it.
Before the pandemic we spent a lot of time helping companies in financial distress and helping them plot a path to recovery.
Now any business could suddenly find itself in the survival mode.
Get in touch with one of our expert team of advisors today.
They will arrange a free, convenient, virtual initial consultation to discuss what your business needs now and help you build a roadmap to thrive and survive over the coming weeks and months.
While cash grants will help, money runs out - a business rescue strategy will help you move your focus beyond this.