VIDEO: Can trade credit insurance help to keep the supply chain moving?

On 4 May 2020, the Government launched the Bounce Back Loan Scheme (BBLS), which is intended to cut red tape to enable smaller businesses to access finance quickly during the coronavirus outbreak.

The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The government guarantees 100% of the loan and there are no any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

The length of the loan is 6 years, but it can be repaid early without penalty. No repayments will be due during the first 12 months.

Under the scheme, lenders are not permitted to take any form of personal guarantee or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).

Businesses can apply for a BBLS loan if it:

• is based in the UK
• was established before 1 March 2020, and
• has been adversely impacted by the coronavirus.

Any business regarded as being a business in difficulty on 31 December 2019 will need to confirm that it is complying with additional state aid restrictions.

Businesses from any sector can apply, except the following:

• banks, insurers and reinsurers (but not insurance brokers)
• public-sector bodies, and
• state-funded primary and secondary schools.

Businesses already claiming under the following schemes cannot apply although it is possible to convert an existing loan under such schemes into BBLS:

• Coronavirus Business Interruption Loan Scheme (CBILS)
• Coronavirus Large Business Interruption Loan Scheme (CLBILS)
• COVID-19 Corporate Financing Facility.

There are 11 lenders participating in the scheme including many of the main retail banks, which are listed on the British Business Bank’s website (www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/). Applicants are directed to approach a suitable lender via the lender’s website. If an applicant is declined by a lender, they can apply to other lenders in the scheme.

The lender will ask applicants to fill in a short online application form and self-declare that they are eligible. All lending decisions remain fully delegated to the accredited lenders.

The Government has produced and published three new Procurement Policy Notes as a direct result of the ever changing Covid-19 environment.

PPN 01/20: Responding to COVID-19

The purpose of PPN 01/20 is to ensure that contracting authorities are able to procure goods, services and works with extreme urgency, to allow them to respond to the pandemic efficiently.

This PPN provides guidance for the following circumstances:

• Direct award due to extreme urgency (regulations 32(2)(c)) (click here to read our article regarding regulation 32)
• Direct award due to an absence of competition or protection of exclusive rights
• Call off from an existing framework agreement or dynamic purchasing system
• Call for competition using a standard procedure with accelerated timescales
• Extending or modifying a contract during its term

PPN 02/20: Supplier relief due to COVID-19

PPN 02/20 focuses predominantly on the supplier to assist in keeping supply chains open and ensuring that suppliers are kept financially sound during these unpredictable times.

This PPN provides guidance for the following circumstances:

• Urgent reviews of contract portfolios and to update suppliers if they believe they are at risk
• Put in place appropriate payment measure to support supplier cash flow
• Where contract payments are based on ‘payment by results’ make payments based on previous invoices
• Ask suppliers to act on a ‘open book’ basis and make cost data available to the contracting authority during this period
• Ensure invoices submitted by suppliers are paid immediately on receipt

PPN 03/20: Use of Procurement Cards

The third guidance note PPN 03/20 relates to the use of procurement cards to increase efficiency and accelerate payment to suppliers.

This PPN provides the following advice and urges organisations to arrange with their procurement card provider to:

• Increase a single transaction limit to £20,000 for key card holders
• Raise monthly limits on spending with procurement cards to £100,000 for key card holders
• Spend on procurement cards each month in excess of £100,000 should be permissible to meet business needs

Although the above advice has been provided, should these limits not be necessary, organisations should seek an appropriate transaction limit or monthly limit.

The PPN also advises that by 30 April 2020, in scope organisations should:

• Ensure that a number of appropriate staff have the authority to use these cards
• Open all relevant categories of spend to enable these cards to be used more widely

Many will have worked collaboratively with their suppliers and customers to deal with the immediate public health crisis. This will have meant offering flexibility as to contractual arrangements, whether in delivery dates, volumes of goods or services supplied, or even in the specification of what has been delivered.

If this is the case, it is important that businesses now do their legal housekeeping and make sure they have a proper record of what has been agreed. Unfortunately, our experience shows that many legal disputes arise out of amendments to contracts, typically where the parties to the contract each have a different view about what exactly they agreed to change.

We would therefore advise businesses to review any amendments that they might have agreed either verbally, by email, or otherwise, and consider whether they need to be captured in a more formal way which will make clear exactly what has been agreed to be varied, and (where appropriate) how long that variation will remain in force.

It’s also important to remember that some contracts contain provisions that set out specific requirements about how amendments are to be made. For example, they might require that amendments are made in writing (rather than verbally). These “No Oral Modification” clauses are commonly found in commercial contracts, and the courts have recently shown that they are willing to enforce them.

Failing to deal with amendments in accordance with contractual requirements could therefore have a serious impact on businesses as they recover from the disruption caused by the lockdown. If they end up in dispute with a customer or supplier, a business could find that the contract has not actually been amended in the way that they think – potentially leading to legal costs and liabilities at the worst possible time.

Yes, but your claim will be limited to any enhanced contractual payments you make to employees who qualify for the relevant family related pay.

All maternity and parental rights remain in force for anyone in this category who is furloughed. However you may need to calculate average weekly pay differently if the employee was furloughed and then started family related leave on or after 25 April 2020.

Furlough pay cannot be claimed for the period that an employee is receiving Maternity Allowance. An employee can agree to accept furlough pay but they must contact Jobcentre Plus to stop their Maternity Allowance payments for this period.

This would depend on the reason as to why the employee is refusing to come into work. An unauthorised absence is where an employee fails to attend work and they do not have a statutory or contractual right, or their employer’s permission, to do so. An employer will not be obliged to pay employees their normal pay for periods of unauthorised absence.

There are some absences which may be viewed as authorised which would entitle the employee to their full pay. For instance, employees who believe that they are in serious and imminent danger by coming to work would be entitled to stay at home and receive pay if their belief is deemed reasonable.

An employer should always try to discuss any unauthorised absences with an employee. They may then consider whether to take disciplinary action against the employee.