In response to 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, Hospitality and Leisure Grant Fund.
Concerned that many smaller charities were missing out, the Charity Tax Group prepared a briefing for officials at BEIS, MHCLG and HM Treasury proposing that the eligibility criteria for the Small Business Grants Fund be amended to allow charities to make a claim where they would be have been eligible to claim for Small Business Rates Relief, had they not claimed mandatory charity business rates relief. The briefing was prepared with the support of sector partners including Small Charities Coalition, NAVCA, CFG and NCVO.
On 2 May, the Government announced that an additional £617 million of grant funding will be made available for distribution by Local Authorities. This additional fund is aimed at small businesses with ongoing fixed property-related costs. Local Authorities are being asked to prioritise businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates.
Asked for comment by the press, CTG Chairman John Hemming said: “Small charities have expressed frustration that the £10k Small Business Grant Fund is only open to organisations claiming Small Business Rates Relief and not those claiming mandatory charity rates relief. This is despite the fact that many small charities have properties of an equivalent size and have been equally affected by the COVID-19 shutdown and the associated loss of income. CTG, working with sector partners, proposed a tweak to the current rules to allow small charities to claim the grant. With current allocation of the grant funds lower than anticipated by Government, we argued that this pragmatic step could deliver urgent financial stimulus to small charities, at no extra cost to the Exchequer. The announcement that charity properties can be eligible for this additional grant fund is very welcome. While this funding is at the discretion of local authorities, this is a positive announcement for small charities that should ensure some are able to access funding that has unattainable to date. Charities are encouraged to look out for application forms being published by their Local Authorities and to contact them to demonstrate their need for this funding”.
Information on the eligibility criteria for the Small Business Rates Relief can be found here. Broadly speaking, it is open to organisations with a primary property with a rateable value <£15k – additional eligibility rules apply if multiple properties are owned. You can check the ‘rateable value’ of your property here.
Guidance has now been published for local authorities and the most relevant content has been reproduced below.
Local Authority Discretionary Grants Fund
This additional fund is aimed at small businesses who were not eligible for the Small Business Grant Fund or the Retail, Leisure and Hospitality Fund.
The cost to local authorities of these grant payments will be met in one of two ways:
- Where they have or plan to spend all of the grants fund allocation for the Small Business Grants Fund and Retail, Hospitality and Leisure Grants Fund, they will receive an additional payment of 5% of their funding allocation (using a grant under section 31 of the Local Government Act 2003).
- Local authorities that, having taken all reasonable steps to provide grants to eligible businesses for the Small Business Grants Fund and/or the Retail, Hospitality and Leisure Grants Fund, still have unspent initial grants funds allocation, will fund the grants from this unspent residual. Local authorities with a projected underspend of more than 5% cannot allocate awards above their 5% threshold
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. 15. 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. We expect 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.
We are asking local authorities to prioritise the following types of businesses for grants from within this funding pot, including:
- 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
- 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.
Where limits to funding available for this scheme require local authorities to prioritise which types of businesses will receive funding, it will be at the local authorities discretion as to which types of business are most relevant to their local economy. There will be no penalty for local authorities because of their use of discretion to prioritise some business types.
Local authorities should 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 have received cash grants from any central government COVID-related scheme are ineligible for funding from the Discretionary Grants Fund. Such grant schemes include but are not limited to
- Self Employment Income Support Scheme
- Small Business Grant Fund
- Retail, Hospitality and Leisure Grant
- The Fisheries Response Fund
- Domestic Seafood Supply Scheme (DSSS).
- The Zoos Support Fund
- The Dairy Hardship Fund
Businesses who have applied for the Coronavirus Job Retention Scheme are eligible to apply for this scheme.
It is recognised that local authorities will need to run some form of application process as the potential beneficiaries are highly unlikely to be known directly by the local authorities.
This will allow local authorities to undertake proportionate pre-payment checks to confirm eligibility relative to their local scheme and to allow each local authority to determine how to use its discretion in relation to the appropriate level of grant. Prepayment checks must include confirming that by accepting payments recipients are in compliance with State aid rules.
Local authorities must use their discretion in identifying the right person to receive this funding, based on their application process. The local authority must call or write to the business, stating that by accepting the grant payment, the business confirms that they are eligible for the grant scheme, including that any payments accepted will be in compliance with State aid requirements.