Although most are already conscious of the available support, a surprising number of businesses are still not fully aware of what is available or how best to utilise the loan to benefit the business. Should you apply for the government bounce back loan? This is a question being asked by many clients currently, with the full impacts of Covid still to be felt. The current expected deadline for new applications is the 4th November.
Firstly, are you eligible to claim? Have you been adversely impacted by Covid-19? If the answer is yes, then you need to know how borrowing this money will improve or stabilise your business. Do not apply for the loan without working out how this will be paid back and what impact will this have on your cashflow in the following few years. It is important to remember that this is a loan and not a grant and therefore requires repayment.
The maximum loan is £50,000 and based on 25% of turnover. It is interest and capital free for the first 12 months and then followed by 5 years repayment at 2.5% interest. If you believe you have been adversely affected by Covid it could be worth using this cheap source of funding to refinance expensive short term borrowing such as HP agreements or even credit cards. We have a client who borrowed the full £50,000 loan to repay some credit card debt and expensive HP’s. Without increasing borrowing the business will save £16,500 over the 6 years whilst also paying off the outstanding capital on the credit card.
The Coronavirus Interruption loan scheme (CBILS) covers loans of between £50,000- £5m. There is more information on all available support in the link below.
If you would like further advice or help on support available, please contact Harry at firstname.lastname@example.org or your local FCG office.