| Fuming: The Governments Job Retention Scheme 08:52 - Mar 25 with 827 views | homer_123 |
So, anyone else worked out the irony of this scheme yet? Though it could well be me being too tired to be in a state of mind to work it out.
The scheme is for those organisations that 'cannot' pay their staff. so you don't have to make them redundant. I quote from the Govs website:
"If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies."
Now, here's the rub....also from the Govs website:
"HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers."
Anyone spotted the key word in that paragraph:
reimburse
Yes, that is right people. For those organisations that cannot pay their staff the Gov will reimburse you. So, how does a company pay it's staff when they can't afford to? Guess where you'll be directed....to the Government Business Interruption Loan scheme. Again from the Govs website:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-
So, a scheme that is setup to pay peoples wages in this time of crisis is actually a reimbursement scheme. For those businesses who can't afford to pay their staff, this is utterly useless and will require you to take out a loan to pay your staff, which you will be reimbursed for but will have had to take a loan to cover those costs (plus interest). |  |
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| Fuming: The Governments Job Retention Scheme on 08:57 - Mar 25 with 784 views | StokieBlue |
I thought the loan was interest free (either 6 or 12 months, I forget).
Given this surely it means that you take the loan interest free and once they have the methods in place to reimburse you will get the money back and pay off the loan and you won't have lost out?
I believe the loans are already available from the banks and any scheme (reimbursement or otherwise will take time to setup).
Assuming I understand it correctly (and I will say now I've not looked into it) then it seems about the best they can do at such short notice.
It's not like there were plans in place for this sort of thing that they could just switch on.
SB [Post edited 25 Mar 2020 9:01]
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| Avatar - IC410 - Tadpoles Nebula |
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| Fuming: The Governments Job Retention Scheme on 09:01 - Mar 25 with 759 views | homer_123 |
| Fuming: The Governments Job Retention Scheme on 08:57 - Mar 25 by StokieBlue |
I thought the loan was interest free (either 6 or 12 months, I forget).
Given this surely it means that you take the loan interest free and once they have the methods in place to reimburse you will get the money back and pay off the loan and you won't have lost out?
I believe the loans are already available from the banks and any scheme (reimbursement or otherwise will take time to setup).
Assuming I understand it correctly (and I will say now I've not looked into it) then it seems about the best they can do at such short notice.
It's not like there were plans in place for this sort of thing that they could just switch on.
SB [Post edited 25 Mar 2020 9:01]
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Also from the Gov:
"The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments."
Not interest free as such. The issue you have as a business owner is 'How much do you borrow?' - given you have no idea how long it is going to last.
Yes, I fully appreciate this wasn't planned for. | |
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| Fuming: The Governments Job Retention Scheme on 09:08 - Mar 25 with 719 views | StokieBlue |
| Fuming: The Governments Job Retention Scheme on 09:01 - Mar 25 by homer_123 |
Also from the Gov:
"The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments."
Not interest free as such. The issue you have as a business owner is 'How much do you borrow?' - given you have no idea how long it is going to last.
Yes, I fully appreciate this wasn't planned for. |
But it is interest free as long as the reimburse scheme comes online quicker than 12 months?
A business borrows X and pays it's staff (Y), it's then reimbursed Z and the government covers interest (I). Assuming the business hasn't spent any of the other money then:
(X + I) = (X - Y) + (Z + I)
It should be flat, unless I am still missing something. Given this surely borrow more than you think you'll need as you will still be flat as you will have the remaining of X to repay the loan once you start getting reimbursed?
Fully appreciate this is much easier for me to sit here and write a formula than it is for businesses to actually take the plunge and borrow the money given all the uncertainty.
Perhaps the government needs to clarify this point - hopefully some more documentation is on the way to you soon.
SB [Post edited 25 Mar 2020 9:09]
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| Avatar - IC410 - Tadpoles Nebula |
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