COVID-19 - Local Authority Discretionary Grants Fund
In response to the Coronavirus, COVID-19, the government announced there would be support for small businesses, and businesses in the retail, hospitality and leisure sectors, delivered through the Small Business Grant Fund and the Retail, Leisure and Hospitality Grant Fund. This new discretionary fund is aimed at small and micro businesses who were not eligible for the Small Business Grant Fund or the Retail, Leisure and Hospitality Fund. Local authorities will be responsible for delivering the grants to eligible businesses.
How much funding will be provided to businesses?
Local authorities may disburse grants to the value of £25,000, £10,000 or any amount under £10,000. The value of the payment to be made to a business is at the discretion of the local authority. Grants under the Local Authority Discretionary Grants Fund are capped at £25,000. The next level payment under the Local Authority Discretionary Grants Fund is £10,000. Local authorities have discretion to make payments of any amount under £10,000. It will be for local authorities to adapt this approach to local circumstances, such as providing support for micro-businesses with fixed costs or support for businesses that are crucial for their local economies. It is expected that payments of under £10,000 may be appropriate in many cases. In taking decisions on the appropriate level of grant, local authorities may want to take into account the level of fixed costs faced by the business in question, the number of employees, whether businesses have had to close completely and are unable to trade online and the consequent scale of impact of COVID-19 losses. Bearing in mind the above, local authorities should set out clear criteria for determining the appropriate level of grant to give businesses clarity.
Who will benefit from these schemes?
These grants are primarily and predominantly aimed at:
• Small and micro businesses, as defined in Section 33 Part 2 of the Small Business, Enterprise and Employment Act 2015 and the Companies Act 2006.
• Businesses with relatively high ongoing fixed property-related costs
• Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis
• Businesses which occupy property, or part of a property, with a rateable value or annual rent or annual mortgage payments below £51,000.
To be a small business, under the Companies Act 2006, a business must satisfy two or more of the following requirements in a year:
• Turnover: Not more than £10.2 million
• Balance sheet total: Not more than 5.1 million
• Number of employees: a headcount of staff of less than 50
To be a micro business, under the Companies Act 2006, a business must satisfy two or more of the following requirements:
• Turnover: Not more than £632,000
• Balance sheet total: Not more than £316,000
• Number of employees: a headcount of staff of not more than 10
The government want local authorities to exercise their local knowledge and discretion and recognise that economic need will vary across the country, so some national criteria for the funds are being set, but local authorities are allowed to determine which cases to support within those criteria. Local authorities are asked to prioritise the following types of businesses for grants from within this funding pot:
• Small businesses in shared offices or other flexible workspaces. Examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment;
• Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;
• Bed & Breakfasts which pay Council Tax instead of business rates; and
• Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.
The list set out above is not intended to be exhaustive but is intended to guide local authorities as to the types of business that the government considers should be a priority for the scheme. Authorities should determine for themselves whether particular situations not listed are broadly similar in nature to those above and, if so, whether they should be eligible for grants from this discretionary fund.
Local authorities set out the scope of their discretionary grant scheme on their website, providing clear guidance on which types of business are being prioritised, as well as the rationale for the level of grant to be provided (either £25,000, £10,000 or less than £10,000).
This grant funding is for businesses that are not eligible for other support schemes. Businesses which are eligible for cash grants from any central government COVID related scheme (apart from SEISS) are ineligible for funding from the Discretionary Grants Fund. Such grant schemes include but are not limited to:
• Small Business Grant Fund
• Retail, Hospitality and Leisure Grant
• The Dairy Hardship Fund
Businesses who have applied for the Coronavirus Job Retention Scheme are eligible to apply for this scheme. Businesses who are eligible for the Self-Employed Income support scheme (SEISS) are eligible to apply for this scheme as well.
Only businesses which were trading on 11 March 2020 are eligible for this scheme. Companies that are in administration, are insolvent or where a striking-off notice has been made are not eligible for funding under this scheme.
Local authorities are currently awaiting further guidance from the government on how these grants should be administered, but check your local authority website for details are you may be able to submit an application now. For example: