Local Authority Discretionary Grants Fund guidance

The government has made available additional funding for a Local Authority Discretionary Grants Fund.  

Government funding

Nationally the discretionary grant fund equates to 5% of the total funds allocated to the small business grant and the retail, hospitality and leisure grant schemes. For the Lancaster City Council area this amounts to £1.68m, which at this point is a finite sum of money.

Grant overview and key dates

The first round of discretionary grant funding closed on 30 June 2020, with £2,000 awarded to each eligible applicant. We are now making available a second round of discretionary grant funding.

In addition to the four business areas eligible for the first round of funding, a further four business areas are now eligible.

Businesses which have already received a grant are not eligible to apply again.

  • Grant applications will close on Friday 28 August 2020 in line with the closure of the small business grant and the retail, hospitality and leisure grant schemes
  • Applicants will be notified of the result of their application by Friday 18 September
  • Applicants who are not successful will have three working days from receipt of their confirmation email/letter in which to appeal the decision. The last date for appeals is therefore Wednesday 23 September
  • Final payment awards from applications will be made by Friday 25 September 2020
  • All funds remaining within the scheme will be disbursed by Wednesday 30 September at the latest. We will decide how that disbursal will be made. All successful applicants will be eligible to receive this additional disbursal funding

As this is a finite sum of money, if the number of eligible applications exceeds the funds available then we will close the application process and cease awarding grants at this point. However, we do not currently anticipate that this will be an issue.


Eligibility for discretionary grants

1. Government guidance

Government grant funding is targeted at support for:

  • Small and micro businesses, as defined in Section 33 Part 2 of the Small Business, Enterprise and Employment Act 2015 and the Companies Act 2006
  • Businesses with relatively high ongoing fixed property-related costs
  • Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis
  • Businesses which occupy property, or part of a property, with a rateable value or annual rent or annual mortgage payments below £51,000

Small and micro businesses - definition

To qualify as a small business under the Companies Act 2006, a business must satisfy two or more of the following requirements in a year:

  • Turnover: not more than £10.2 million
  • Balance sheet total: not more than 5.1 million
  • Number of employees: a headcount of staff of less than 50

To qualify as a micro business under the Companies Act 2006, a business must satisfy two or more of the following requirements:

  • Turnover: Not more than £632,000
  • Balance sheet total: Not more than £316,000
  • Number of employees: a headcount of staff of not more than 10

2. Business type

The government has asked local authorities to prioritise four key business types in this grant scheme:

  • Small businesses in shared offices or other flexible workspaces. Examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment
  • Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment
  • Bed and breakfasts which pay council tax instead of business rates
  • Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief

Lancaster City Council is supporting an additional four business types:

  • Businesses that trade directly from a vehicle rather than from premises (for example taxi drivers, approved driving instructors and ice cream vans, where the vehicle is the focal point of the business)
  • Ofsted registered nurseries – including home-based nurseries with additional property costs
  • Non-public sector businesses with a rateable value of £15,000 - £51,000
  • Businesses that are still unable to re-open due to Covid-19 government imposed restrictions post 4 July 2020 (please see list in question guidance or via information ‘i’ next to this question on the online form)

3. Local decisions

We have made the following local decisions and interpretations of these criteria:

  • Property costs do not have to be relatively high, but must be fixed
  • Fall in income does not have to be significant, but a fall must be demonstrable
  • Regular market traders with fixed building costs, such as rent, are deemed to be permanent market traders, rather than casuals
  • Traders who have permanent street pitches with rent will also count as permanent market traders
  • Market traders are those who have a permanent pitch that they pay rent for (or similar fixed building-related costs) as opposed to those who ‘go to market’ with their products
  • Bed and breakfasts do not include lettings where the property is let on a self-catering basis as opposed to establishments providing individual guest rooms and which serve breakfast
  • Stallholders in larger non-market venues (for example antiques centres) should apply under the shared spaces business type
  • Fixed property-related costs are building costs or similar and are not plant, vehicles etc except in the case of the business area where the business trades from the vehicle (see above) in which case the vehicle costs will be eligible as the property-related costs
  • Shared workspace applicants should not have been assessed for Business Rates
  • Shared workspace applicants who have their business based in their domestic property should also have a rented work area in a shared space outside their home
  • Businesses still unable to open after 4 July should not be solely home-based, but have a rented work area outside of their home
  • Ofsted registered nurseries can be home-based as well as renting property elsewhere. If home-based they must be able to demonstrate fixed property costs above the normal domestic property costs
  • The costs of rent or mortgage will not be considered relevant for those businesses applying as a business with a rateable value of £15,000 - £51,000
  • Businesses that trade from a vehicle must use their vehicle as the public-facing aspect of their business as opposed to businesses that use their vehicle wholly or mainly for storage or transportation
  • Businesses currently enjoying a rent holiday are still eligible to apply

4. Other considerations

  • Companies that are in administration, are insolvent or where a striking-off notice has been made are not eligible for funding under this scheme
  • Only businesses which were trading on 11 March 2020 are eligible for this scheme

Other government support and impact on eligibility

Businesses or business owners who are eligible for any of the government business support schemes listed below are ineligible for this scheme. Check your eligibility before application using the links provided to avoid the clawback of any grants mistakenly awarded.

Businesses who have applied for the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme are eligible to apply for this scheme.

Businesses that have furloughed staff are eligible to apply for this scheme.

Tax liability

This funding is in the form of grants and so does not have to be repaid. However the funding does count as taxable income should the business be in overall profit by the end of the financial year.

State aid

Payments made under Lancaster City Council’s Discretionary Grants Fund of up to and including £10,000 can be provided under the De Minimis State Aid rules, meaning applicants can receive up to up to €200,000 (approx £178,600) of aid within a three fiscal year period.

If the De Minimis threshold has been reached or would be reached when the value of the grant is included, then the payment should be made under the COVID-19 Temporary Framework for UK Authorities. The threshold per undertaking is €800,000 (€120,000 per undertaking active in the fishery and aquaculture sector or €100,000 per undertaking active in the primary production of agricultural products) and the applicant must confirm that they are not an ‘undertaking in difficulty’ on 31 December 2019.

Potential applicants who are part of a wider organisation should ensure that they are not in danger of breaking State Aid rules before applying.

Fraud

Lancaster City Council does not accept deliberate manipulation and fraud. Any business caught falsifying their records to gain additional grant money will face prosecution and any funding issued will be subject to clawback.

Paper applications

Applying online ensures a faster grant payment for eligible businesses. If you are unable to apply online, an application form can be posted out on request by emailing econdev@lancaster.gov.uk or calling 01524 582000.

Paper applications should be returned to: Business Support, Lancaster City Council, Town Hall, Dalton Square, Lancaster, LA1 1PJ

Paper applications must be received by the business support team by 28 August 2020. An email or telephone acknowledgement can be requested.

Grant deadline

All applications must be received by 28 August 2020.