Advice businesses may be blocked from accessing the government’s multi-billion pound coronavirus business bailout package, Beaufort Group has warned.
The stimulus package announced late yesterday afternoon includes a £330bn book of government-backed loans for firms adversely affected by the global pandemic. An additional £20bn in grants and tax relief measures was also promised by Chancellor Rishi Sunak.
However, whether advice firms will be able to access the measures was questioned by Beaufort Group chairman Simon Goldthorpe.
He explained: "The Chancellor's unprecedented announcement this afternoon is welcome reassurance for British business at a time of extreme stress on the economy. But the devil is always in the detail.
"For financial advisers, there are questions arising. For example, will the Financial Conduct Authority relax capital adequacy requirements for advice firms to help them to access the £330bn guaranteed loan schemes announced by the Chancellor?
"If cap ad rules remain as they are, it is difficult to see how the loan scheme could benefit advisers."
Speaking at the daily Downing Street press conference yesterday Sunak said the government was, however, looking at a range of regulatory easements for affected industries, though this is initially to be focused on operations such as pubs, food suppliers and delivery drivers.
Coronavirus package
The fiscal package announced on 18 March includes:
To ensure that businesses have access to the funds they need, the government is to provide:
- support for liquidity amongst large firms, with a major new scheme being launched by the Bank of England to help them bridge coronavirus disruption to their cash flows through loans
- increasing the amount businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2m to £5m, and ensuring businesses can access the first six months of that finance interest-free, as the government will cover the first six months of interest payments
- including new legal powers in the Covid Bill enabling the government to offer "whatever further financial support we think necessary to businesses"
Providing £20bn of business rates support and grant funding to help the most-affected firms manage their cashflow through this period by:
- giving all retail, hospitality and leisure businesses in England a 100% business rates holiday for the next 12 months
- increasing grants to small businesses eligible for Small Business Rate Relief from £3,000 to £10,000
- providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000
The Chancellor also announced all mortgage lenders have agreed they will support customers that are experiencing issues with their finances as a result of Covid-19, including through payment holidays of up to three months. "This will give people the necessary time to recover and ensure they do not have to pay a penny towards their mortgage in the interim," the government said.
Sunak also confirmation that government advice to avoid pubs, clubs and theatres etc. is sufficient for businesses to claim on their insurance where they have appropriate business interruption cover for pandemics in place.
