Following the outbreak of the Coronavirus, the European Commission has approved schemes to aid affected businesses on the basis 1 Approval reference 17 of their Temporary Framework. This includes the COVID-19 Temporary Framework scheme for the UK.

When applying for these grants, you must confirm that your business will not exceed the state aid limits if this grant is paid.

Do the grants to businesses made as a result of the COVID-19 pandemic qualify as state aid?

Yes. The state aid regulations apply to all of the business grant schemes, including discretionary grants made by the Council.

All recipients must comply with the regulations, which state that the maximum permitted funding is €800,000 under the COVID-19 Temporary Framework for UK Authorities.

This threshold is lower for companies which are based in agriculture, fisheries or aquaculture. For fishery and aquaculture businesses the threshold is €120,000. For agriculture businesses the threshold is €100,000

The Euro equivalent of the Sterling aid amount is calculated using the Commission exchange rate applicable on the date the aid is offered.

What does this mean?

Any aid provided under this scheme will be relevant if you wish to apply, or have applied, for any other aid granted on the basis of the European Commission's Temporary Framework.

You will need to declare this amount to any other aid awarding body who requests information from you on how much aid you have received. You must retain this letter for four years after the conclusion of the UK's transition from the EU and produce it on any request from the UK public authorities or the European Commission.

As part of your application, you will be asked to declare that you will not exceed state aid limits if you receive this grant.

You will need to declare all the grants you have already received, including any expanded Hospitality, Leisure and Retail Discount received against business rates accounts.

If you are not sure if the help you have received is state aid, you will need to check with the awarding body or seek independent advice.

For the avoidance of doubt, anything that you have received from the Council counts as state aid.

Is there anything else I need to know?

You will also be asked to confirm that your business is not an 'Undertaking in Difficulty' (within the meaning of Article 2(18) of the General Block Exemption Regulation) on 31 December 2019).

An 'Undertaking in Distress is defined as an undertaking in which at least one of the following occurs:

(a).  In the case of a limited liability company (other than an SME that has been in existence for less than three years), where more than half of its subscribed share capital has disappeared as a result of accumulated losses.

This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital.

(b). In the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME that has been in existence for less than three years), where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses.

(c). Where the undertaking is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors.

(d). Where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan.

(e).  In the case of an undertaking that is not an SME, where, for the past two years:

  • The undertaking's book debt to equity ratio has been greater than 7.5, and 
  • The undertaking's earnings before interest, tax, depreciation and amortisation (EBITDA) interest coverage ratio has been below 1.0