Support for businesses providing visitor accommodation

The following fixed monthly grants to eligible businesses were announced on 26th June, but will be revised, in light of the decision to extend payroll support.  Revisions will be announced in advance of the October 1st start date.  The grants for hotels or guest accommodation are paid per bedroom, whilst the rate for self-catering businesses applies to each unit:

Original amounts communicated - subject to further review and likely revision

The eligibility conditions for this scheme have been revised slightly to take into account feedback received from industry representatives.

Eligible businesses

Businesses will be considered eligible if all three of these conditions apply:

1. They are expecting to incur a loss in the 12 months ending 31st March 2021. For this purpose, the forecast profit or loss should include any mitigating actions they plan to take, such as reducing discretionary spend and managing staff numbers.

2. The business can demonstrate being commercially viable prior to the Covid-19 pandemic. Businesses that did not show profits in their last two annual financial statements prior to 31st March 2020 will need to prove a realistic expectation of returning to profitability.

3. The business is planning to be open in April 2021. This will normally mean that the business is currently accepting advance bookings for next year, and holding deposits against 2021 bookings.

Further guidance

Government cannot be expected to utilise taxpayers’ money to make good all expected losses that businesses will incur during this difficult period.  Many businesses will have reserves available that have been built up over a strong historic trading record and this is the type of trading period when these reserves will require to be called upon. It is recognised that some level of reserves will be required to be carried into future trading periods to provide businesses with essential resilience and source of ongoing investment.

While businesses will not be excluded from applying for support beyond September irrespective of the value of reserves available, the expectation is that those businesses with substantial reserves or owners with extensive personal wealth, will not need to access taxpayer funded support beyond September. Businesses are expected to make every effort to secure shareholder and / or lender support to mitigate losses in preference to relying on grant funds.  Bear in mind that these businesses will already have received considerable support during the March to September period.

Standard support

Eligible businesses will qualify for standard support where they are expecting to make a loss in the 12 months ending 31st March 2021, and where this level of payment will be sufficient for the business to be able to resume normal operations at the start of 2021 season.  Please note the grant payment is not expected to cover all losses. Businesses claiming standard support may also need to rely on their reserves.

Enhanced support

Eligible businesses will qualify for enhanced support where they are expecting to make a loss in the 12 months ending 31st March 2021, and when the standard grant is insufficient for the business to be able to resume normal operations at the start of the 2021 season. This will normally mean that they are unable to meet all expenses as they fall due after taking mitigating actions such as minimising spend on non-critical staff as well as using available reserves held within the business. The onus will be on businesses to demonstrate this higher funding requirement with further information such as a cash flow forecast. Relatively few businesses are expected to qualify for enhanced support and those that claim will undergo additional scrutiny to ensure that this increased level of support is justified.

Room numbers and categorisation

Businesses may claim a grant in respect of those bedrooms or units that are available for use in the grant period, subject to this being no more than the number of rooms already registered in each category as visitor accommodation with the States of Guernsey. For this purpose, bedrooms or self-catering units that are closed for reasons solely related to Covid-19 restrictions, will be treated as available for use, and a claim may be made.

Period

Grants are available in respect of the period starting October 2020. The States of Guernsey expects this grant scheme to remain in place until the end of March 2021, however this will be subject to review in the light of ongoing trading results and any relaxation of travel restrictions.

Use of Grant

Although claimants are free to use the grant scheme to fund their businesses operations in the way they see fit, it is expected that the scheme will enable the retention of critical employees throughout the period. Claimants with significant rent costs may still need to negotiate terms with their landlord for a deferral or waiver of costs. Those with significant mortgage interest costs may also need to discuss options with their bank.

Capping of grant

The total grant that a business can claim will be capped at the actual loss incurred in the 12 months to 31st March 2021. This means that business support payments will not be allowed to contribute to a profit making position. Should these payments result in a profit, the cap will apply and support payments suspended. For example, where a business happily exceeds their forecasted position and achieves a profit in the 12 month period after including grant income, they will be asked to return a proportion of grant payments.

Insurance proceeds

Businesses are expected to pursue insurance claims, provide relevant information and include the expected proceeds of these in their forecast.

Owner’s salary

Businesses may include within their profit forecast a reasonable salary cost for any operational role performed by the business owner. In these cases the salary cost should be clearly noted in the claim form. 

Businesses will be asked to self-assess against the eligibility criteria set out in this guidance on their initial claim form. To support this self-assessment, business will also be asked to complete a forecast template which will demonstrate the profit or loss forecast for the 12 months ending 31st March 2021 and signed Annual Financial Statements for the last two available years. In the development of the grant scheme, many businesses kindly provided a financial forecast and previous Annual Accounts. In these cases businesses will not need to resend their Annual Accounts.

It is acknowledged that this information will be commercially sensitive. Access to profit forecasts and Annual Financial Statements will be limited to those people responsible for administering the accommodation grant claims process.

The States of Guernsey will review these self-assessments, and will in particular compare the forecasts to the previous trading record. Those business claiming the enhanced grant will be reviewed for compliance with the additional eligibility requirements of this rate.

To ensure transparency of this grant scheme, the States of Guernsey reserves the right to publish details of support provided to those businesses claiming. This may include details of the name of the business, the level of grant paid (standard or enhanced), as well as the amount paid.

There may be cases where the grant entitlement set out in this scheme does not adequately reflect the needs of a business. In these cases claimants should contact the States of Guernsey using the details provided below to discuss their concerns.

Glamping units

Businesses operating Glamping units may apply for a Visitor Accommodation grant, and their need will be assessed on a case by case basis. For this purpose Glamping units will normally be considered as semi rigid structures such as safari cottages, pods and cabins. Tents, yurts, tepees and pitches in campsites are not included in this scheme because their costs differ so significantly from other visitor accommodation. These businesses may however wish to make a claim under the payroll co-funding scheme available until 30th September.

To submit a claim, please complete the on-line form, which is available at this link. Businesses are required to submit their claim by no later than 31st August, after which the scheme will be closed to new claims. This is to enable further work on the value of the grants and to be in a position to confirm to business owners their eligibility and the grant payable prior to the start date of 1st October.

Each claim submitted on-line will need to be accompanied by a profit forecast for the year-ended 31st March. This must be prepared using our template, which is available from below. Where a business owns more than one establishment, separate claims will normally be required for each, in order that the eligibility of each can be separately considered.

The first payments will be due in respect of October and will be paid during that month to help with cash flow pressures. Subsequent grant payments will be payable monthly in arrears subject to ongoing eligibility and provision of required financial updates.

In addition to the initial claim, businesses will be required to provide quarterly trading results for each of the quarters ending 30th September, 31st December and 31st March, within 21 days of the quarter end. Trading results for the quarter ended 30th June are required with the initial claim submission as part of the 12 month profit forecast. Subsequent quarterly trading results will be used to update these forecasts.  This will enable ongoing monitoring of the trading across the sector as well as establish continued eligibility. 

The States reserves the right to request additional information where necessary to validate claims and to suspend grant payments or request their return if the validity of the claim cannot be confirmed. Further, it may be necessary to request the return of a grant if actual trading results show a profit for the 12 months end 31st March 2021, despite a loss being forecast for this period in the initial claim.

If you have any questions please email business.support@gov.gg and include “accommodation grant” in the subject line.  Please do not email any documents to this address unless asked to do so. Alternately please call 743803. Lines are open Monday to Friday 9.00 to 5.00pm.