On Saturday 2 May 2020 the Government responded to lobbying from the SME community and announced a new discretionary fund to provide much needed support to small businesses which fall outside the scope of the existing UK Covid-19 funding schemes. Under this new scheme, local authorities are free to make payments to businesses based on local economic need at their discretion.
The total funding available is up to £617 million, which equates to a 5% uplift to the £12.33 billion funding previously announced for the Small Business Grants Fund (SBGF) and the Retail, Hospitality and Leisure Grants Fund (RHLGF). It is expected that the exact amount for each local authority will be confirmed in the first week of May.
Under the new fund, local authorities may allocate the following awards per business:
- grant of £25,000;
- grant of £10,000; or
- grant of any amount at the local authority's discretion under £10,000.
- small businesses with ongoing fixed property-related costs;
- with under 50 employees; and
- with a significant drop of income due to Coronavirus restriction measures.
In a joint ministerial letter about the top-up fund that had been posted on Twitter by Malton MP Kevin Hollinrake on Saturday, it is clear that any business eligible for the Self-Employed Income Support Scheme will be ineligible to receive a grant via the new discretionary fund.
While allocation of funding is at the discretion of local authorities, they are encouraged to prioritise:
- businesses in shared spaces;
- regular market traders;
- small charity properties that would meet the criteria for Small Business Rates Relief; and
- bed and breakfasts that pay council tax rather than business rates.
Further government guidance for local authorities is expected to be released in due course.
Such grants are highly likely to constitute State aid and local authorities will need to be mindful of compliance when distributing this support. A welcome development in State aid law will be the recent approval of a UK umbrella scheme, which gives public bodies authorisation to use the new options under the European Commission's COVID-19 Temporary Framework (including the €800,000 grant option).
This announcement is the latest intervention for businesses affected by the COVID-19 pandemic. Other forms of support include:
- Bounce Back Loans for small and medium sized businesses;
- Small Business Grant Fund for grants of £10,000 to eligible small businesses;
- Retail, Hospitality and Leisure Grant Fund for grants of £10,000 or £15,000 to businesses with properties of a rateable value up to £51,0000;
- Coronavirus Business Interruption Loan Scheme for support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years;
- Coronavirus Large Business Interruption Loan Scheme for companies with turnover of above £45m.
The government guidance hub sets out the latest information on public funds which are available at this time.
For advice in this area, including how to access the funding and legal requirements, please contact one of our public funding experts.
DWF's award winning Public Sector law team has market leading experience of advising Central Government and Regional and Local Authorities as well as grant beneficiaries on State aid compliance and administering loan and grant schemes.