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FAQs: the Small Business Grant Fund and the Retail, Food and Hospitality Grant Fund

03 April 2020
People on two crossed escalator
The Government has launched the Small Business Grant Fund ("SBGF") and the Retail, Hospitality and Leisure Grant Fund ("RHLGF") which shall make grant awards to eligible businesses affected by the COVID-19 pandemic. These FAQs have been designed to assist Local Authorities administering the SBGF and RHLGF programmes as well as eligible businesses receiving such funds.

What is the Small Business Grant Fund?

The Small Business Grant Fund is a Local Authority administered grant programme that allows awards of £10,000 for eligible businesses in England.  It is open to businesses that on 11 March 2020 qualified for Small Business Rates Relief (including those in the £12,000 - £15,000 taper) or would qualify for the Rural Rate Relief Scheme

The SBGF excludes:

  • properties which are considered to be for personal use (such as private stables, beach huts and moorings);
  • car parks and parking spaces; 
  • businesses which were in liquidation or dissolved at 11 March 2020; and
  • business which are not ratepayers; and 
  • businesses that do not meet the relevant State aid exemption   (see below)

What is the Retail, Hospitality and Leisure Grant Fund?

The Retail, Hospitality and Leisure Grant Fund is a Local Authority administered grant programme allowing awards of:

  • £10,000 for properties with a rateable value of £0-£15,000; and
  • £15,000 for properties with a rateable value of £15,001-£51,000
  • to eligible businesses in England.   It is open to businesses that as at 11 March 2020 qualified for the Expanded Retail Discount (including charities which would be within the Expanded Retail Discount had their payable rates not been reduced to nil). 

The RHLF excludes:

  • properties with a rateable value above £51,000;
  • businesses that are eligible for SBGF;
  • properties which are considered to be for personal use (such as private stables, beach huts and moorings);
  • car parks and parking spaces; 
  • businesses which were in liquidation or dissolved at 11 March 2020; 
  • business which are not ratepayers; and 
  • businesses that do not meet the relevant State aid exemption   (see below).  

When will funding be available?

Funding will be available in the coming days.  Most Local Authorities are in the process of setting up programmes to administer the funds. 

The Government is eager for these to be in place as soon as possible stating: "this grant scheme will offer a lifeline to businesses who are struggling to survive due to the corona virus shutdown. Local Authorities should make payments as quickly as possible to support struggling businesses." 

What legal obligations apply to the Local Authorities administering the funds?

Government guidance has been published which explains the conditions that must be applied by each Local Authority in administering the funds.  

These include putting in place appropriate processes to:

  • manage the risk of fraud;
  • demonstrate State aid law compliance; and 
  • satisfy Central Government reporting obligations

Provided the fund requirements are fulfilled, then the cost of the grants distributed to businesses shall be met by a Central Government award to the Local Authority under s.31 of the Local Government Act 2003.  This payment is expected to be made in early April 2020.   

Additional costs incurred by the Local Authority in providing this support are expected to be covered under the New Burdens Doctrine.

The Government is also making available its digital assurance tool, Spotlight, which it is hoped shall assist Local Authorities to create a clear audit trail demonstrating compliant expenditure.

How can awards comply with State aid law?

Grant awards made under both schemes constitute 'State Aid' and each Local Authority is required to collect evidence to show that the awards have been made in compliance with State aid law. 

The Government guidance gives each Local Authority a choice of how to set up their schemes in line with State aid law. The two main routes are:

  • the De Minimis Regulation which allows up to €200,000 of State aid to be awarded in the current financial year and two previous financial year.  Awarding aid under this cover involves obtaining a declaration setting out previous awards of aid and ensuring that other compliance requirements are met; or
  • the EU's Temporary Framework which allows up to €800,000 of State aid to be awarded between 1 February 2020 and 31 December 2020.  Awarding aid under this cover involves obtaining a declaration setting out any previous awards of aid and ensuring that other compliance requirements are met, including that the recipient is not an 'undertaking in difficulty' (or was not such at 31 December 2019) .

Every beneficiary should also consider State aid law compliance, because the case-law is clear that although funding may be administered by a public body, if unlawful State aid is awarded the beneficiary may be required to repay the value of the award with compound interest. Therefore the beneficiary should make their own assessment at the point of award. 

How do these funds interact with the Expanded Retail Discount 2020-2021 announced on 11 March 2020?

The Expanded Retail Discount is a separate initiative that is also administered by Local Authorities on behalf of the Government Under this measure, the Business Rates Retail Discount has been  extended to include the leisure and hospitality sectors.  Guidance on this scheme can be provided on request. 

DWF's award winning Public Sector law team has market leading experience of advising Central Government and Local Authorities on State aid compliance and administering grant schemes. Please get in touch if we can be of assistance. 

Further Reading

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