The government has announced a series of measures to help nurseries during the coronavirus outbreak.
With the country on lock down and nurseries restricted to all but key workers’ children, virtually every nursery will be suffering. The government has announced a series of measures designed to help businesses through the current crisis, but many have yet to have the details fleshed out. This is perhaps understandable given the scale of the problem and the ambition of the measures, but it does add to the climate of uncertainty. From what has been announced so far, there are a number of measures that could assist nurseries.
Early Years Entitlements
Early Years Entitlements will continue to be paid, notwithstanding nurseries may have to close. Depending on the make-up of a nursery’s intake, this could make a significant difference. In any event, it is likely to make a sizable contribution towards covering the fixed costs of a nursery should it decide to close its doors.
Job Retention Scheme
The Job Retention Scheme will see the government reimburse businesses 80% of the wages of employees (up to £2,500 per month) if they are furloughed i.e. sent home but retained as employees. If nurseries combine this with a mutually agreed salary cut it could see staff costs for furloughed employees reduce to zero. Salary cuts may seem an extreme measure, but the net effect on employees may not be as severe as it sounds if they do not have to incur expenses associated with their work, such as travel. If you are planning to change employee’s terms, we recommend you seek advice from a specialist (such as a member of our employment team) before doing so.
Coronavirus Business Interruption Loan Scheme
The government says that payments to businesses under the Job Retention Scheme will begin at the end of April. But in the meantime, businesses still have to pay employees. This could cause significant cashflow issues if no income is being received. In practice, this may be the main reason businesses seek assistance under the Coronavirus Business Interruption Loan Scheme.
This is a scheme offering loans of up to £5m with the first 12 months of the loan being interest free. The precise lending eligibility criteria are still to be set out (much to the frustration of businesses and banks) but in general it is thought they will only be available to businesses who are viable and have a plan to repay; short term finance to cover the period until the Job Retention Scheme payments kick in seems to satisfy this requirement. If this is of interest, businesses should speak to their bank, it may also be beneficial to speak to a finance professional to assist with any application.
Business Rates Holiday
Although initially excluded, nurseries are now to receive a business rates holiday for 12 months from 1 April 2020. It will be administered by local authorities with no need to apply.
Grants
Nurseries are still excluded from the grant scheme for businesses in the retail, hospitality and leisure sectors, but there are grants of £10k available for businesses receiving small business rates relief. Local councils should be in touch regarding these as there is no need to make an application.
Commercial Forfeiture Moratorium
Legislation is due to be passed that will prevent landlords foreclosing on leases due to non-payment of rent until the end of June 2020. This could provide breathing room for delaying rental payments, but it is always advisable to have an open dialogue with landlords if you wish to delay rental payments. If you are looking to stop rental payments without landlord agreement, we would advise you speak to our Real Estate Team to ensure there are no nasty surprises.
Loan Repayment Holidays
Most high street banks are offering their customers loan repayment holidays to help with cash flow; if you have outstanding loans you should speak to your bank if this is of interest.
We are living in uncertain times and the government is introducing unprecedented support to businesses; but guidance and details are still not clear, and the situation is changing every day. Our Childcare Team is on hand to help, so get in touch if you have any questions.
