£500 million Economic Resilience Fund announced to support Welsh businesses

16 April

First Minister, Mark Drakeford, has announced a £500 million Economic Resilience Fund to support the Welsh economy during the COVID-19 pandemic.

Businesses and charities are experiencing a dramatic decrease in trading as a result of the coronavirus and this new support scheme aims to plug the gaps in the support schemes offered by the UK Government.

The new £500 million Welsh fund aims to provide support for business of all sizes. It is comprised of two types of funding:

• £100 million loan finance

A £100 million loan fund will be available from the Development Bank of Wales for companies experiencing cash flow problems. Businesses affected by the crisis will be able to apply for loans of between £5,000 and £250,000 at favourable interest rates.

•  £400 million grant scheme

A further £400 million is to be set aside for a new grant scheme, with the amount available depending on the size of the business.

Micro businesses employing up to nine people will be able to apply for a grant of up to £10,000, provided they meet the following criteria:

• The business is not eligible for the Business Rate Grant.
• Employs between 1-9 employees.
• The operating address is in Wales.
• Evidence of business address within the last three months.
• Must be able to provide a trade out plan and strategy.
• Must be VAT registered with turnover above £80,000 per year.
• Experienced a greater than 40% reduction in turnover since 1 March 2020.
• Evidence the reduction in turnover is a result of COVID-19.
• The business must aim to maintain employment for at least 12 months.
• Only 1 application can be made per business.

Small and medium sized businesses (SMEs) which employ between 10 to 249 employees will be able to apply for a grant of up to £100,000, provided they meet the following criteria:

• Must not be applying for any other funding source.
• 10 or more full time employees but less than 250 employees.
• The operating address is in Wales.
• Must be VAT registered with turnover above £80,000 per year.
• Not eligible for the £25,000 Business Rates Grant or if the applicant has received this grant any funding provided will be deducted from the final amount approved under this scheme.
• Experienced a greater than 60% reduction in turnover since 1 March 2020.
• Must be able to provide a trade out plan and strategy.
• Inability to access funding needed from a bank (including the British Business Bank) is demonstrated.
• Confirm no future compulsory redundancies will be made as long as the Coronavirus Job Retention Scheme is in place.
• Applicant businesses and organisation will be expected to align with the ethos and principles of the Economic Contract.
• Agree for application details to be shared following GDPR approval with delivery partners of the scheme (Local Authorities and Business Wales).
• Agree for the name of the business to be published on a recipients of support list on the Welsh Governments web site.

Applications for these will be processed on a first come first served basis.

A similar scheme is also being developed for larger businesses and is expected to be announced in the coming weeks.

In addition to this the UK Government has pledged a further £350 million to support the devolved administration in Wales to tackle the coronavirus. This is on top of the £250 million already allocated.

Further information on the Economic Resilience Fund can be found here.

For further guidance on the types of funding available to businesses in response to the COVID-19 outbreak contact Backhouse Jones on 01254 828300.