While the coronavirus pandemic continues to take its toll on the world, the UK Government’s support is due to end within the next few months. The Coronavirus Job Retention Scheme (furlough), which saved many from losing their jobs, is scheduled to end on April 30th, 2021. Loan schemes, like the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme are scheduled to end on March 31st, 2021.
So, what options do businesses have once the government-backed support that they might have relied upon ends?
There may be tough choices
Business owners may need to consider tough choices as the end of government support looms. These tough choices could include downsizing to smaller premises, reducing the number of products or services offered, or even making redundancies.
If a company cannot continue, be it down to the new restrictions or a loss of trade, it may even have to close through a liquidation. While admitting you need to liquidate your company may not be a pleasant decision to make, doing so voluntarily is generally preferable to being forced into compulsory liquidation via a winding-up petition from creditors.
The budget may change things
With the budget for the next financial year yet to be announced, the current support schemes’ status going forward is unknown.
While the vaccine rollouts give some hope towards a reduction of the pandemic’s hold on society, businesses may still need support if they want to survive in the coming months.
The next budget announcement is due on March 3rd, and whether it will contain new business support measures, or renew the existing schemes again, is unknown.
Prior to the furlough scheme’s extension to the end of April 2021, the Job Support Scheme was due to come into effect in November 2020. The scheme has since been postponed, though it may see a revival later. We’re unlikely to know before an official announcement.
What if your business becomes insolvent?
Businesses become insolvent when their funds are insufficient to cover their liabilities. With the coronavirus’ added pressure, many businesses have found themselves in such a position. Fortunately, help for this type of shortfall isn’t limited to government support schemes, and if your business was viable before the pandemic, with the right support, recovery might still be viable. Insolvency arrangements such as Company Voluntary Arrangements (CVA) allow insolvent limited companies to repay their debts in tailored, affordable monthly instalments. A similar arrangement exists for sole traders: An Individual Voluntary Arrangement (IVA).
The end dates for the government’s current coronavirus support schemes are approaching, leaving some businesses concerned as to what they’ll do if restrictions are still in force. Those business owners may have to make hard decisions as to how, and if, they’re to continue. The budget, set to be announced on March 3rd, may change what help is available. However, businesses should plan for several possible scenarios. Options are available if a business becomes insolvent; some are designed to close it in an orderly manner, while others focus on helping recovery.