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COVID-19: What if my insurance won’t pay out?

The COVID-19 outbreak, and government measures surrounding it, have left many companies unable to trade as normal, or in fact, at all. Due to this, many business owners quickly looked to their insurance for financial aid under so-called ‘business interruption’ policies.

For many, they were hit with the hard reality that their policies would not cover them for the current pandemic. This hit headlines last week as regulators confirmed that this would be the case for many. Here we look at the alternative options available to those affected.

What other options are available?

For business owners left without the financial aid of an insurance payout, it is easy to feel anxious about what the future holds for your company. Fortunately, alternative options are available to provide companies with financial assistance during this time. These include:

Government Coronavirus support schemes

In order to minimise the economic damage of the COVID-19 outbreak, and subsequent lockdown, the government has introduced a number of aid schemes. For companies unable to submit insurance claims, these are valuable options during the outbreak.

  • Coronavirus Business Interruption Loan Scheme

For businesses whose financial situation has been left damaged by the effects of the outbreak, the Coronavirus Business Interruption Loan Scheme (CBILS) is an option. The scheme provides approved businesses with low-interest loans of up to £5million in the form of overdrafts, asset/invoice finance, and term loans. These hold no interest for the first 12 months. As a specialist finance broker, Wilson Field can assist small and medium-sized businesses with the application process for the scheme. To find out more, get in touch today.

The Coronavirus Business Interruption Loan Scheme closed to new applications on 31st March 2021.
  • Cash grants for hospitality, leisure, and retail businesses

For those in the hospitality, leisure, or high street retail sector, the lockdown has meant a complete halt in trading. In order to combat this, the government has provided funds for cash grants of up to £25,000 for affected businesses. Eligible companies should receive written notice from their local authority of how/when they can expect to receive such funds. For more information, visit the government website.

Company recovery options

If your business is viable, but a drop in revenue has left your company struggling financially, company rescue may be an option. With the help of an insolvency practitioner, such as ourselves, procedures can be carried out in order to resolve such difficulties.

  • Arrange an affordable debt repayment plan

For those struggling to meet their liabilities, an affordable monthly repayment plan can be formally established through means of a company voluntary arrangement (CVA). Your financial situation will be evaluated, and a level of repayable debt will be agreed between an insolvency practitioner, and your creditors. As long as the terms of the arrangement are adhered to, the company is protected from further action from its creditors for its duration.

More on company recovery

Company closure options

If your company’s financial situation has declined beyond feasible rescue, it may be sensible to consider pursuing voluntary liquidation before action is taken from your creditors.

  • Creditor’s Voluntary Liquidation (CVL)

With our help, the procedure of a creditors’ voluntary liquidation (CVL) can be put into place. Your company will cease trading, and its assets will be realised in order to provide creditors with the best achievable return. Pursuing a CVL can tie up your situation before it gets further out of hand. This decreases the likelihood of company directors committing wrongful trading, which carries heavy consequences.

More on company closure

Alternative financial solutions

If your company would benefit from the aid of a cash injection during this time, raising alternative finance may be the solution. As a finance broker, Wilson Field can guide you and your company through the variety of options available, and find the most suitable for your position. To find out more about the financial solitons we can offer, get in touch through our dedicated website.

In summary

The COVID-19 outbreak has left many businesses across the UK anxious about what the future holds. In particular, many companies in the hospitality, leisure, and retail sectors have found that their insurance policies do not cover them for losses incurred as a result of the pandemic.

Fortunately, for businesses unable to receive financial aid from insurance payouts, there are other options available.

Through government-led schemes such as the Coronavirus Business Interruption Loan, approved companies can benefit from low-interest loans of up to £5million to aid them through the current period. These loans hold no interest for the first 12 months, and are available through a number of funders throughout the UK. There are also cash grants of up to £25,000 available for companies in the hospitality, leisure and retail sectors, which will be provided by local authorities, who will contact those eligible with further information.

If your company’s financial situation is facing decline, you may require the help of licensed insolvency professionals such as ourselves. Services including company voluntary arrangement (CVA) can be used to manage repayments on unaffordable debt during this difficult period. For companies past the point of rescue, creditors’ voluntary liquidation (CVL) can be pursued to ensure that the situation does not get further out of hand.

If you feel that your company would benefit from a cash injection, a range of financial solutions can be explored through a broker such as ourselves.

How we can help

For companies struggling during the epidemic, due to the unavailability of insurance payouts or otherwise, we can help. Wilson Field is a team of regulated insolvency professionals with the expertise to aid your company through this difficult period.

Through a free consultation with one of our experienced advisors, we can evaluate your company’s position to work out the best step forward. Whether the answer is company recovery options such as a CVA, or ceasing trading through a CVL, we can guide you through the process.

Directors must remain vigilant of their company’s financial situation, and take action to keep this under control. If your company is in need of assistance, act now: get in touch today.

Beverley Horton

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