If you’re self employed in a small to medium sized business you’re probably finding lockdown tough. Perhaps there’s been a reduced need for your business services and you’re worrying about how your business will survive the coming months.

You might already have considered bank loans and guarantor loans or other means of making ends meet.

But recently the government announced an extension to the furlough scheme. They also announced two further grants for those who are self employed, and where Covid-19 has impacted their business.

The Self Employed Income Support Scheme (SEISS) is a series of grants originally introduced during the first lockdown to help those who were self-employed and struggling. They are taxable and applications for the first two grants have now closed.

Grants three covers November 30th 2020 to January 31st 2021 and grant four will cover the period from 1st February 2021 to April 30th 2021 (although no official amount of grant for the fourth period has been announced yet).

The application looks at your last three month period and if you’re successful grants 80% of the average profits or £7,500, whichever is lower.

Who Is Eligible?

In general terms if you were eligible for the first two grants you are likely to be eligible for the next two. You don’t have to have applied for the first two and you can carry on working.

But there is one crucial difference from the first two:

You have to show that your business was impacted by reduced demand.

Your business will also have to have earned £50,000 a year or less on average in the previous three months. You will also have to have earned at least 50% of your income from being self-employed.

HMRC will look at your tax return for 2018/2019, so you will have needed to have filed for that year. It will look at the previous three years if your tax returns for 2018/2019 aren’t eligible.

For more information visit the government Self Employed Income Support Scheme page.

What Other Help is There if You Are Self Employed?

Other income support options you might consider include deferring your tax payment and claiming universal credit (although if you are applying for a SEISS grant any universal credit counts as income. Your Universal Credit might also be reduced because of the grant).

But self-employed people are also eligible for the Coronavirus Business Interruption Loan Scheme.

This is a temporary loan, overdraft, invoice finance and asset finance of up to £5 million, for up to 6 years. You can apply for this up until 31st January 2021 and there are a number of lenders taking part. If you are rejected by one lender you can apply to another.

You may also be eligible for Business Interruption Payment to cover the first 12 months of interest payments and any lender fees. Here the government gives lenders an 80% guarantee on each loan (subject to a pre-lender cap on claims).

To be eligible for this scheme you must meet the following:

  • Your business is based in the UK with a turnover of no more than £45 million per year
  • Your borrowing proposal would be considered viable by the lender, if not for the current pandemic
  • You can self-certify that coronavirus has adversely impacted your business

You cannot apply if you are a state funded school, bank or insurer (or reinsurer) or public sector body.

Coronavirus Bounce Back Loan

If your small to medium sized business is affected by Covid-19 you may be able to borrow between £2,000 and £50,000 from a lender. The government guarantees 100% of the loan and for the first 12 months you will not have to pay any fees or interest, or make repayments.

As with the Coronavirus Business Interruption Loan Scheme you cannot apply if you are a state funded school, bank or insurer (or reinsurer) or public sector body.

But you may be eligible for this scheme if you have been negatively affected by coronavirus and your business was not classed as ‘undertaking in difficulty’ on 31 December 2019. Again the scheme is open until 31 January 2021.

If you’re self-employed and have been adversely affected by Coronavirus it’s worth exploring these government loans and grants. It may provide the help you need to see you through a difficult time.