Bounce back business loans

[Gavin John Hyde]

What's people's views on these bounce back loans from the government.
You can borrow 25 percent of your turnover.
It's backed 100% by government who pay the interest for first 12 months then it's 2.5% which is pretty good for a bank loan for a business.
Don't have to show future profitability just that you traded recently. Banks are giving them out quite willingly as its no risk to them as they are not risking there capital.
Anybody applied?
Might be tempted and then get a bigger van as its cheaper than vehicle finance...

 

[Baddegg]

Sounds win win to me mate.....government getting businesses moving again...

 

[pc1966]

If we could get one we would, but as a recent start-up we don't have a 2019 turnover to use, so not clear if future contracts can be used in place of that.

But as you say, cheaper than other finance so if there is anything your business needs now or in the immediate future, and that can be living money, then it looks the best option you can get. I suspect there is a lot of good deals on new vans to be had at this point in time!

 

[ED17]

I've done it, money should be in the bank this week. Only to be used for business purposes but no payments for the first 12 months and government pays the first years interest.

 

[pc1966]

I've done it, money should be in the bank this week. Only to be used for business purposes but no payments for the first 12 months and government pays the first years interest.

Can "business purposes" include paying salary?

 

[ED17]

Can "business purposes" include paying salary?

I would assume so as it would keep you going until you can earn some money. It can be paid back without penalties, so get it, use it if you need to or pay it back if you don't. That's how I see it.

 

[Baddegg]

I’m applying this afternoon.....as others a lot cheaper than finance and as @ED17 says if ya don’t use it give it back no penalties ?

 

[plugsandsparks]

Mine arrived today, took less than 36 hours. There are some limitations as to what you can use it for but the main purpose is working capital which includes paying yourself and other staff. Cannot remember the precise wording but there are some limitations on using it for fixed assests.
I go it purely to enable me to pay myself on time and manage my supplier base. I was a victim of Wolseleys policy of only supplying "key establishments" like hospitals supermarkets and the like. I therefore had to set up new accounts with competitors of Wolesey but they would only offer cash account, no credit...
I fully expect suppliers to tighten credit terms substantially so working capital is vital for my business.

 

[Baddegg]

FAQs: Bounce Back Loan Terms - British Business Bank

See the FAQs about bounce back loans repayment terms. Learn more about the Bounce Back Loan Scheme, bounce back loan terms and bounce back loan repayment terms.

www.british-business-bank.co.uk

words words words

 

[Gavin John Hyde]

Can "business purposes" include paying salary?

From what I have read online yes it can. Basically any legit business expense so salary. Assets etc etc
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I thi

If we could get one we would, but as a recent start-up we don't have a 2019 turnover to use, so not clear if future contracts can be used in place of that.

But as you say, cheaper than other finance so if there is anything your business needs now or in the immediate future, and that can be living money, then it looks the best option you can get. I suspect there is a lot of good deals on new vans to be had at this point in time!

As long as you were trading on 1st March you should be eligible. I did read somewhere about 2020s projected turnover rather than 2019s being used for new firms...

'Bounce back loans' – help for small businesses and income support for those missing out elsewhere, eg, limited company directors and self-employed

Small businesses can now apply for a new 100% state-backed loan worth up to £50,000, with no interest charged or repayments needed in the first 12 months

www.moneysavingexpert.com

 

[pc1966]

As long as you were trading on 1st March you should be eligible. I did read somewhere about 2020s projected turnover rather than 2019s being used for new firms...

That would be great

Our new attempt at world domination started July (I think) 2019 but so far most of our time has been sitting waiting for planning permission and just after we got that in Feb 2020 - bang COVID-19! Not even hired any minions yet

 

[Gavin John Hyde]

Well I have applied most basic of applications, name , email company name and account details,enter turnover for 2019 tick the box and wait.
Santander have a few thousand applications to work through so who knows how long it takes?
did read in the small print they dont credit check you like a normal loan as by definition the loans are designed for companies experiencing a downturn due to the virus. its like a self declaration thing.

 

[Leesparkykent]

I applied monday as soon as it was made live. Took the 50k and just going to graft with it over the next year and hand it back just before 1st payment is due. It went in the bank yesterday.

 

[Gavin John Hyde]

I applied monday as soon as it was made live. Took the 50k and just going to graft with it over the next year and hand it back just before 1st payment is due. It went in the bank yesterday.

I like your thinking Lee, 50k free cash is not to be turned down, as long as you can repay it you would be foolish not to take it and make it work for you. I know a scrap dealer who has applied and will make good use of it

 

[littlespark]

It was presented on the Martin Lewis programme last night, and I’m sorely tempted just to have a bit of cash in the bank since I’m not getting the SE scheme money.

Will wait and see what UC off next week first though

 

[Leesparkykent]

It was presented on the Martin Lewis programme last night, and I’m sorely tempted just to have a bit of cash in the bank since I’m not getting the SE scheme money.

Will wait and see what UC off next week first though

does your Mrs work?

 

[davesparks]

It was presented on the Martin Lewis programme last night, and I’m sorely tempted just to have a bit of cash in the bank since I’m not getting the SE scheme money.

Will wait and see what UC off next week first though

When filling in the income and expenses for UC make sure you include all allowable expenses, so everything that is allowable on your tax return.

 

[Gavin John Hyde]

Have applied for the bounce back loan, dont need the cash as such now, but would rather have it in my account just in case I need it should work stop completely or suppliers get tight with credit.
Filled it in yesterday afternoon online, had email late last night to digitally sign the documents, had email this morning saying all approved.
should have money during the week.
A very quick and smooth process.

 

[littlespark]

does your Mrs work?

Yes. Part time and furloughed.
we are partners in my business as it gave a higher tax threshold when I started out. (On advice from my accountant)
She got tax rebates last 2 years which make my business ineligible for the income support from hmrc.

 

[pc1966]

My colleague applied for us today to Santander and within a couple of hours we were approved! Surprise was not enough, I had to resort to astonishment. However, the catch (beyond them realising our nefarious plans, etc, soon) was the clause:

"You may not use your loan to finance the purchase or hire of fixed assets, other than to replace existing assets with equivalent assets"

So for folk looking for a replacement van that is fine, but if you want some sharks with attached lasers and don't already have any in your volcanic lair, you are out of luck. Damn!

 

[bigspark17]

How much is the loan up too?

 

[Baddegg]

How much is the loan up too?

25% of previous years turnover....

 

[pc1966]

25% of previous years turnover....

I am not sure if it has to be the previous year, as our current business only started mid-2019 so has no previous year's accounts, etc., but we do have a big contract signed for when we can get going.

But for general guidance it is 25% of turnover which hopefully if OK for most existing businesses if 2019 was a good year.

 

[Baddegg]

I am not sure if it has to be the previous year, as our current business only started mid-2019 so has no previous year's accounts, etc., but we do have a big contract signed for when we can get going.

But for general guidance it is 25% of turnover which hopefully if OK for most existing businesses if 2019 was a good year.

I think for the purpose of simplicity the previous year is used but obviously it’s up to the bank if they feel you are a safe bet then all good ?

 

[pc1966]

...obviously it’s up to the bank if they feel you are a safe bet...

Yes, that is why I was amazed!
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Just wondering who has got the loan so far, and what generally have you used it for? A new van is one thing discussed, but for many folk it will simply be living money just now.

 

[Baddegg]

Yes, that is why I was amazed!
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Just wondering who has got the loan so far, and what generally have you used it for? A new van is one thing discussed, but for many folk it will simply be living money just now.

Only applied this morning, new van, wages, training, advertising anything you want really....

 

[pc1966]

Only applied this morning, new van, wages, training, advertising anything you want really....

Good luck! There will always be stuff you need to spend on so anything that keeps you going until things pick up.

 

[Leesparkykent]

How much is the loan up too?

50k and 25% of turnover/estimated turnover.

 

[plugsandsparks]

Yes, that is why I was amazed!
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Just wondering who has got the loan so far, and what generally have you used it for? A new van is one thing discussed, but for many folk it will simply be living money just now.

As expected , after paying myself which has been well overdue and suppliers all my remaining money has gone and the only money left in the bank is the loan. If i did not get the loan i simply would not be able to pay myself for a while to keep a positive working capital. Pretty relieved really.
Still not optimistic on how credit is going to be managed by wholesalers and suppliers in general. I still have a Barclaycard which gives some leeway but the credit limit is not huge

 

[pc1966]

Still not optimistic on how credit is going to be managed by wholesalers and suppliers in general. I still have a Barclaycard which gives some leeway but the credit limit is not huge

Getting that covered with the BBB loan ought to result in no problems. Also you are not going to be unusual in that case, so probably no future issues with credit ratings.

At least, we can all hope.

I'm not in quite the same business, but the basic financial rules are the same as professional sparks like yourself. It won't be easy for anyone in the near future, which is why the gov has underwritten the BBB so make the most of it. It is one of the very few things they have done that seems to be competent, and ultimately the treasury understands that keeping businesses afloat is going to keep tax revenues in the years to come so the risk of the BBB is probably well worth it on a national level.

 

[pc1966]

Well our application went in just after lunch time today and an email arrived from the bank at 6pm to say the money had arrived in the account.

I'm astonished that anything could be done that quickly and efficiently!

 

[Andy78]

"You may not use your loan to finance the purchase or hire of fixed assets, other than to replace existing assets with equivalent assets"

So for folk looking for a replacement van that is fine, but if you want some sharks with attached lasers and don't already have any in your volcanic lair, you are out of luck. Damn!

Will they be checking though, and if so, how ?

 

[pc1966]

Will they be checking though, and if so, how ?

Personally I doubt it unless there is some other reason to investigate the business activities (e.g. fraud investigation, bankruptcy proceedings, etc) but obviously it would be wise to sit down and plan what you are going to use the money for and check it is at least in the spirit of the terms (so it has to be for the business long-term interests, not to pay a big dividend, etc).

I think the main no-no is to use it to pay off other debts without prior agreement (in particular to replace debt you are personally liable for with one gov-backed). Some info was posted here:

Personal liability for Bounce Back Loans

If your company is unable to keep up with the repayments for its Bounce Back Loan, you may be worried about how this may affect your personal finances.

www.realbusinessrescue.co.uk

What you can do is use the loan to pay your salary, and income otherwise used to pay you could then buy a new van for your business (or shark with laser, as needed).

 

[Andy78]

Personally I doubt it unless there is some other reason to investigate the business activities (e.g. fraud investigation, bankruptcy proceedings, etc) but obviously it would be wise to sit down and plan what you are going to use the money for and check it is at least in the spirit of the terms (so it has to be for the business long-term interests, not to pay a big dividend, etc).

I think the main no-no is to use it to pay off other debts without prior agreement (in particular to replace debt you are personally liable for with one gov-backed). Some info was posted here:

Personal liability for Bounce Back Loans

If your company is unable to keep up with the repayments for its Bounce Back Loan, you may be worried about how this may affect your personal finances.

www.realbusinessrescue.co.uk

What you can do is use the loan to pay your salary, and income otherwise used to pay you could then buy a new van for your business (or shark with laser, as needed).

Thanks I'll give all the info a read before pestering my bank.
As you say you could pay yourself wages into a buffer account and then stock your koi pond with ill tempered mutated sea bass as you see fit.

 

[Baddegg]

Thanks I'll give all the info a read before pestering my bank.
As you say you could pay yourself wages into a buffer account and then stock your koi pond with ill tempered mutated sea bass as you see fit.

It’s really simple @Andy78, takes 10 mins on the directgov site which will show you all available lenders, easier if you own bank is on the list, also easier if you have a dedicated business account, money takes a matter of days.....as @Leesparkykent pointed out at the beginning just take it and graft with it and give it back with in the year interest free.....I know people that have paid up they van finance with it (lower rates of interest).....I also know someone that took £50k and has put it in premium bonds for the year ?

 

[davesparks]

I also know someone that took £50k and has put it in premium bonds for the year ?

I don't think that's allowed as you have to declare the money won't be used for investments, but I guess that comes down to whether you get caught or not.

 

[Baddegg]

I don't think that's allowed as you have to declare the money won't be used for investments, but I guess that comes down to whether you get caught or not.

Didn’t say it was legal mate.....I just know a lot of people that couldn’t care less about that sort of thing ?......

 

[Midwest]

Doesn't this dosh appear in your accounts, you have to submit HMRC? Premium Bonds and accrued interest (£40 a month) would appear somewhere.