In this week’s budget the Chancellor, Rishi Sunak focused on five key measures to help preserve cash and prevent insolvency in UK SMEs as part of the 'Coronavirus business interruption' fund:
- Time to pay
- Business rates relief
- Business interruption scheme
- Statutory sick pay
These measures aim to help small and medium sized enterprises – business with fewer than 250 employees - that could struggle as the coronavirus pandemic worsens. Staff sickness is expected to rise in tandem with customer numbers expecting to fall as people follow official advice as it currently stands to isolate themselves if they exhibit symptoms or have come into contact with someone who has coronavirus.
Keely Rushmore, SA Law Employment Partner, was asked by The Financial Times for her views on the 'Coronavirus business interruption' fund for SMEs. She said: “Budget measures need to be publicised widely, put into place quickly, as well as being clear and responsive. If the measures are not available without delay, there is a real risk of what should be temporary effects becoming permanent.”
In addition to the published comments in the Financial Times newspaper and online, Keely also adds: “Although the impact of the Coronavirus is hoped to be temporary, it is undoubtedly going to be significant, especially for SMEs and lower paid employees and workers (particularly those on zero hours contracts). The government’s proposed package of measures to support the economy generally should of course be welcomed as a safety net.”
Read the full article that features Keely’s comments here. (Please note, this content is behind a paywall)
A Litigators perspective on the 'Coronavirus business interruption' fund for SMEs:
Simon Walsh, SA Law Commercial Litigation expert also shares his thoughts:
“The 'Coronavirus business interruption' scheme is best viewed as part of a welcome suite of measures to help SMEs through the squeeze many are already feeling.
Unlike traditional business interruption insurance which pays out if a claim is within policy terms, the fund is loan based so anything received will have to be repaid and factored into future cashflows. It will however fill what could be a big gap for some and has the benefit of giving qualifying businesses access to funds that they won’t have if they don’t have insurance. It is also tailored to COVID-19 and will come as a relief to policy holders who are finding out that their cover doesn’t extend to this strain of Coronavirus because it isn’t specifically named in their terms.
Insurers looking carefully at policy wording and some are refusing cover. Businesses should do the same and make sure any qualifying conditions are met as soon as possible.”