COVID-19 has had an impact on the financial health of many industries in Scotland. The food and drink sector is no exception, feeling the impact acutely. The seafood sector relies heavily on the large export markets of Asia and the EU and local commercial food markets, servicing bars and restaurants across Scotland and the rest of the UK. The collapse of these markets due to COVID-19 means the seafood sector has been one of the worst affected during this crisis.

In order to combat these effects and protect a large number of coastal and rural communities that rely on its profits, the Scottish Government has established the Scottish Seafood Business Resilience Fund with support of up to £10 million in grants for the benefit of seafood businesses suffering severe hardship. It should be noted that this support is expressly to address shortages or unavailability of finance due to the COVID-19 pandemic. Due to the fast-changing nature of the situation, the eligibility criteria may change on short notice.

Businesses are invited to complete the application form on the Scottish Government webpage and return it by 5pm on Monday 20 April.

What support is being offered?

The fund is initially targeted at all seafood processors and seafood businesses, including those involved in exporting live seafood and shellfish. The fund is available to those businesses who have/are suffering 'severe hardship'. The amount granted to any business will be determined on a case by case basis, based on the business' fixed costs, subject to a cap based on a percentage of the business' average earnings (being the average earnings over the past 3 years).

The maximum level of grant available for businesses with average earnings over a three-year period of up to £1.5 million will not exceed 4% of those earnings. The maximum level of grant for businesses with average earnings over a three-year period of over £1.5 million will not exceed 3% of those earnings, up to a maximum level of £100k.

The award of a grant is discretionary and there is no automatic entitlement even where eligibility criteria are met.

What can the support be used for?

The Scottish Government has made clear that the measures already announced by the UK Government, including the Business Interruption Loan Scheme and the Coronavirus Job Retention Scheme, will still be available to businesses in the seafood sector and will help to some extent.

The Scottish Seafood Business Resilience Fund is in place to provide additional support for the fixed costs of operating the business and for no other purpose. Evidence of these fixed costs must be provided with any application for funding.

The grant funding must not be used for:

  • payment towards staff wages (as there is already support available here through the Coronavirus Job Retention Scheme)
  • payment to primary producers (if the business is active in processing and marketing products)
  • payment to offset debt from a business that has permanently ceased trading
  • the transfer of ownership of a business
  • winding up costs for a business which decides to permanently close

What evidence do businesses need to provide?

Applicants will need to provide:

  • confirmation of whether the business is trading or temporarily ceased trading
  • an overview of the business' typical trading operation, setting out the percentage of its trade across UK retail, UK food service and exports
  • the last set of audited accounts (it is presumed that if the accounts are unaudited then the last set of filed accounts will suffice, although the grant conditions are not clear);
  • the number of employees
  • the average earnings for the past three years
  • evidence of fixed costs

Following the end of the COVID-19 pandemic, the business will also be required to submit a signed statement of compliance with the conditions of the grant.

Is the grant repayable?

Only in certain circumstances but note the Scottish Government has made clear that, given new financial support for businesses is being announced on a day to day basis due to the COVID-19 pandemic, if new streams of funding are subsequently announced by the UK or Scottish Governments which achieve the same outcomes as the Scottish Seafood Business Resilience Fund then businesses may be asked to repay all or a portion of the grant.

In addition, the whole or part of the grant may have to be repaid if:

  • an alternative form of support has been made available to the grantee by the UK or Scottish Governments during the pandemic
  • the business breaches the terms of the grant
  • there is a change from the purposes for which the grant was awarded
  • the grant was obtained fraudulently

How can Brodies help?

If you have any questions about this or any other matter relating to the impact of the COVID-19 on your business, please get in touch with any member of the corporate team or your usual Brodies contact.

Contributor

David Lightbody

Partner