The Chancellor, Rishi Sunak, recently announced £1billion in additional financial support for Covid-hit businesses in the hospitality and leisure sectors.
Pubs, restaurants, cafes and leisure outlets are all continuing to suffer as the impact of the new Omicron variant of Covid takes its toll on takings and revenues in the hospitality sector. To combat this, the Government is offering one-off grants to hospitality and leisure businesses that have been adversely affected by the new variant.
Recipients must be solvent businesses, and ratepayers in the hospitality and leisure sector. For example, a pub; hotel; restaurant; bar; cinema; or amusement park.
But how much grant funding is available? And what other measures are being offered to get your business through this tough winter period?
What's included in the support package?
Business leaders in the hospitality and leisure sectors have been calling on the UK Government to provide additional support for some time. So, the news of one-off grants has been widely welcomed, even if it's clear that more support may be needed for both sectors to fully recover.
Grants are per premises and the amount paid is varied by rateable value (RV) of each eligible premises, in three bands: £0-15k (£2.7k); £15-51k (£4k); and over £51k (£6k).
This is the support that's currently available for eligible businesses:
- Businesses in the hospitality and leisure sectors in England will be eligible for one-off grants of up to £6,000 per premises, plus more than £100 million discretionary funding will be made available for local authorities to support other businesses.
- Government will also cover the cost of Statutory Sick Pay (SSP) for Covid-related absences for small and medium-sized employers across the UK.
- £30 million further funding will be made available through the Culture Recovery Fund, enabling more cultural organisations in England to apply for support during the winter.
Is £6k enough to solve your cashflow issues?
Any kind of financial support will always be warmly welcomed, but a one-off grant of £6k per premises may well be insufficient if your business is in a precarious cashflow position.
These government-backed grants will help in the short-term, but for your hospitality or leisure business to get back into a positive cashflow position, additional funding is almost certainly going to be needed during the early stages of 2022.
So, what other funding options are available?
- Recovery Loan Scheme - the Recovery Loan Scheme is still available until June 2022, offering Covid-impacted businesses the opportunity to borrow up to £10M in government-secured loans at very attractive rates.
- Reduced VAT rate - a reduced rate of VAT (down from 20% to 12.5%) is still available for hospitality businesses, which can help to reduce your VAT expenditure and boost the company's underlying cashflow.
- Other business finance measures - other measures for resolving your cashflow problems could include negotiating an extended overdraft with your bank, taking out an additional business loan to boost your cash reserves, or even looking at merchant cash advances if your business takes card payments.
- Getting proactive with spend management - cutting your costs and expenditure is another way to rebalance the cashflow scales. Negotiating better deals and prices with existing suppliers, or switching to new providers, can help to reduce your average expenditure and stretch out the available cash you have.
Talk to us about improving your cash position
If you're facing the first quarter of 2022 with some severe cashflow hurdles to overcome, please come and talk to us. As your accountant, we can help you apply for the available government grants, and look at other alternative routes to additional funding.
Get in touch to resolve your cashflow issues.