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PostPosted: Wed Apr 29, 2020 2:01 pm 
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Coronavirus Bounce Back Loan - To help small and medium-sized businesses affected by coronavirus, the bounce back loan scheme has been intriduced. The key details of the loan are below:

The scheme will go live from Monday 4th May 2020 and cash will be released within days for eligible businesses.
Businesses can borrow between £2,000 and £50,000.
The Government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
Loan terms will be up to 6 years.
The Government will work with lenders to agree a low rate of interest for the remaining period of the loan.
The scheme will be delivered through a network of accredited lenders.

https://www.gov.uk/guidance/apply-for-a ... -back-loan


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PostPosted: Wed Apr 29, 2020 4:16 pm 
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Did I read somewhere that the loan amount will be dependant on your tax return, or turnover?

Because a one year loan at 0% (longer at a higher rate) would make sense to many people, if only to pay off a few credit cards.

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PostPosted: Wed Apr 29, 2020 6:20 pm 
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Sussex wrote:
Did I read somewhere that the loan amount will be dependant on your tax return, or turnover?

Because a one year loan at 0% (longer at a higher rate) would make sense to many people, if only to pay off a few credit cards.

I think it is a maximum of 25% of turnover, however I can't see any business being able to pay back a loan of 25% of turnover in one year. Profit will be a lot less than 25% of turnover.

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PostPosted: Wed Apr 29, 2020 6:59 pm 
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I think it is a maximum of 25% of turnover, however I can't see any business being able to pay back a loan of 25% of turnover in one year. Profit will be a lot less than 25% of turnover.

The loan can be extended longer than the interest free first year, but as the gov are still guaranteeing it it should be a low interest rate.

Which does make it quite attractive to many, even if it takes a few years to pay back.

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PostPosted: Wed Apr 29, 2020 8:53 pm 
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funny how this appeared after the money ran out for the grant scheme :wink:

I heard someone on the radio this morning point out that getting into debt without any guarantees of being able to generate enough revenue to afford it doesn't make good business sense

Once you have taken on the debt you have got to pay it back as well as your ongoing bills so a good few will fall into the trap and end up failing to repay before the interest free period ends

We are heading for a recession that will make the 20's look like a minor dip taking on debt even if it is interest free might prove to be a bad idea

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PostPosted: Wed Apr 29, 2020 10:19 pm 
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edders23 wrote:
funny how this appeared after the money ran out for the grant scheme :wink:


Who says the money has ran out?

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PostPosted: Wed Apr 29, 2020 11:44 pm 
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Sussex wrote:
Did I read somewhere that the loan amount will be dependant on your tax return, or turnover?

Because a one year loan at 0% (longer at a higher rate) would make sense to many people, if only to pay off a few credit cards.

Problem there perhaps that that makes it sound more like a personal loan than something for business purposes, so not sure if that would be a goer, even assuming the scheme was available to micro-businesses like the average owner-driver.

I've got my three-year badge and plate up for renewal late-summer, and annual insurance at about the same time, so a loan to cover those might be useful. I could get one-year licences and a repayment plan for the insurance, but that works out a lot more expensive for the licences, and the insurance plans also charge a very high rate of interest (I normally pay my insurance in two instalments over two months, which doesn't cost any more than a single payment).

Interesting, though, but as others have said, not a good idea to take out loans you've no hope of repaying, even assuming such sums were available in the first place.

But the ability to repay will depend on the state of the trade over the next couple of years, which is the million dollar question, if you'll pardon the pun.

grandad wrote:
edders23 wrote:
funny how this appeared after the money ran out for the grant scheme :wink:


Who says the money has ran out?

Edders :roll:


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PostPosted: Thu Apr 30, 2020 5:29 am 
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grandad wrote:
Sussex wrote:
Did I read somewhere that the loan amount will be dependant on your tax return, or turnover?

Because a one year loan at 0% (longer at a higher rate) would make sense to many people, if only to pay off a few credit cards.

I think it is a maximum of 25% of turnover, however I can't see any business being able to pay back a loan of 25% of turnover in one year. Profit will be a lot less than 25% of turnover.

Indeed, but the loan terms are *up to* six years - as Sussex said, the only relevance of the one-year period is that this will be interest-free :-o

Some stuff that may be relevant:

City AM wrote:
Sunak said banks will not need to perform any “forward looking tests of businesses viability” and that businesses would need to fill out just a “simple, quick, standard form”.

Businesses will not even need to provide proof of turnover in the application process.


Sky News wrote:
Crucially, applicants will not face a viability test - but some fraud checks will have to be completed.


Mirror wrote:
The loans will be available from 9am with "no forward-looking test of business viability, no complex eligibility criteria, just a simple, quick standard form for businesses to fill in.

Firms are expected to get funding within 24 hours of applying.

There is no limit on a firm’s turnover and firms do not need to show proof of turnover. But sources expect only smaller firms will apply because of the limit on funds.

There is no limit on a firm’s turnover and firms do not need to show proof of turnover. But sources expect only smaller firms will apply because of the limit on funds.

The government says it has designed the scheme to be fast, and affordable.

Banks have reportedly agreed on low-interest rates with the government, who will cover those payments for the first year.

The 100% backing from the Treasury will also allow the banks to carry out fewer checks, although they will still be subject to fraud investigations, meaning they should be approved quickly.


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PostPosted: Thu Apr 30, 2020 5:57 am 
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grandad wrote:
edders23 wrote:
funny how this appeared after the money ran out for the grant scheme :wink:


Who says the money has ran out?



BBC news about 3 days ago apparently many councils have paid all of it out

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PostPosted: Thu Apr 30, 2020 6:40 am 
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edders23 wrote:
grandad wrote:
edders23 wrote:
funny how this appeared after the money ran out for the grant scheme :wink:


Who says the money has ran out?



BBC news about 3 days ago apparently many councils have paid all of it out

That doesn't mean the money has ran out. That means that all eligible businesses in that area have received the grant.

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PostPosted: Thu Apr 30, 2020 10:08 am 
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grandad wrote:
edders23 wrote:
grandad wrote:
edders23 wrote:
funny how this appeared after the money ran out for the grant scheme :wink:


Who says the money has ran out?



BBC news about 3 days ago apparently many councils have paid all of it out

That doesn't mean the money has ran out. That means that all eligible businesses in that area have received the grant.



Councils warn government bailout cash 'gone now'


I very much doubt that ALL eligible businesses got it

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PostPosted: Thu Apr 30, 2020 10:23 am 
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edders23 wrote:
grandad wrote:
edders23 wrote:
funny how this appeared after the money ran out for the grant scheme :wink:


Who says the money has ran out?



BBC news about 3 days ago apparently many councils have paid all of it out

Not sure how all this is working, precisely, but councils may have been provided with a limited pot to distribute. As I said, the SNP Government got a lump sum from Westminster to replicate one of the schemes up here, but there was a big hoohah from businesses who claimed they were being short-changed, and that the SNP were funnelling the cash to their preferred recipients. Don't know what it was all about, precisely, but apparently certain businesses down south were getting £x,000 per *premises*, while the SNP were providing £x,000 per *business* regardless of the number of premises, so obviously some businesses felt they were losing out.

But the schemes administered directly by the UK Treasury will be different, and no limit as such - they'll just be adding to existing Government debt by borrowing on the money markets, so there's no fixed limit as such.

But you may have a point of sorts in that I wouldn't be surprised if the Government is now punting this scheme in preference to giving us another month (or however long) of the self-employment grants :sad: Which I hope I'm wrong about, but the intention now seems to be to make these loans incredibly accessible for sole traders/micro-businesses etc, so in a way it looks broadly similar, the big difference being of course that these loans will have to be paid back, unlike the grants. Obviously there will be a lot of defaults and loans obtained fraudulently here, but maybe the Treasury is thinking that at least some of the loans will be repaid, unlike the grants (although as the grants are taxable some of the grant cash will be clawed back that way).

But I'm wondering how applications will be processed etc - to some extent it looks like the self-employment grants, but HMRC has most of the information necessary for that already. I wonder what evidence and what criteria they'll use for these loans?

Which is another reason I'm preferring the grants - if you're eligible then you get the full monty, but with the loans you don't know whether it's maybe a good idea to apply for a smaller amount, because if you apply for a bigger amount then you're less likely to get it? Or do you automatically get up to 25% of turnover if you meet the criteria for a loan? And there will be various banks and financial institutions providing the loans, so which one to apply to?

The various press reports etc makes it all sound a bit too easy, so I suspect it'll be a bit more difficult than it sounds.

Decisions, decisions.

But in the meantime, the big question is, should I cut my own hair with a pair of scissors and a comb? :-s


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PostPosted: Thu Apr 30, 2020 10:26 am 
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edders23 wrote:
grandad wrote:
That doesn't mean the money has ran out. That means that all eligible businesses in that area have received the grant.

Councils warn government bailout cash 'gone now'

I very much doubt that ALL eligible businesses got it

That's all about different cash, though, as far as I can tell.

It's more about normal council expenditure, which has obviously risen due to the crisis, while revenue from parking, leisure centres etc has reduced.

The Government has given additional cash to councils to cover this deficit, but that's obviously not enough.

But it's different cash as compared to the grants for businesses.


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PostPosted: Thu Apr 30, 2020 11:56 am 
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StuartW wrote:
edders23 wrote:
grandad wrote:
That doesn't mean the money has ran out. That means that all eligible businesses in that area have received the grant.

Councils warn government bailout cash 'gone now'

I very much doubt that ALL eligible businesses got it

That's all about different cash, though, as far as I can tell.

It's more about normal council expenditure, which has obviously risen due to the crisis, while revenue from parking, leisure centres etc has reduced.

The Government has given additional cash to councils to cover this deficit, but that's obviously not enough.

But it's different cash as compared to the grants for businesses.
Yes,
That money is nothing to do with the rates grant. That is extra money that is being given to Councils to cover other expenses. Our own Council were given £36,000 in the first batch of payments but we got £509,000 from the second batch. However our increased costs that have arisen because of Covid, including lost revenue from things like car parking, which is now free, is currently just above £800,000 so we are some way short still.

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PostPosted: Thu Apr 30, 2020 6:40 pm 
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Decisions, decisions.

I think it's a no brainer TBH, unless the interest rate after the first year is a silly one. But I would be surprised if that was the case.

I get the 'I would prefer extra months on the grant system' reasoning, but a loan at a rate none of us could get on the open market has got to be beneficial to many in our trade at this time.

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