During this unsettling time it is hard to see through the fog of anxiety and worry. However, as a business owner it is crucial that you know about the finance support available and most importantly, how to apply for it.
There are two main avenues for lending which you may or may not have heard of:
- Bounce Back Loan Scheme
- Coronavirus Business Interruption Loans Scheme
Both are “government backed” to some extent. This means that if you can’t pay back what you owe, the government will step in as your guarantor and take over your payments to your lender. The main advantage of the new Bounce Back Loan is that it’s fully backed, unlike a Business Interruption Loan.
What’s the difference between the two types of coronavirus loans?
Business Interruption Loans
- Better suited to bigger businesses (turnover up to £45 million) who need a loan for up to £5 million over 6 years.
- The money you borrow is 80% government backed. So if your business doesn’t get back on track, for every £1 you owe, the government would cover up to £0.80. The remaining £0.20 is down to you.
- The application process is complicated and requires you to put together an in-depth “borrowing plan”. Though this might not phase a business with a finance team, it’s a lot to ask of a self-employed person.
Bounce Back Loans
- Developed as an alternative for smaller firms and self-employed people. Sometimes described as a “micro loan”.
- You can borrow up to 25% of your annual turnover (max £50,000) and pay it back over 6 years.
- But you’ll pay nothing for the first year, and over that time, the government covers the interest on your behalf.
- Your loan is 100% government backed. So if your business doesn’t, well, bounce back, every £1 you owe will be repaid in full by the government.
- You can find a list of lenders here
So now you know what they are, how do you get your hands on them?
Well, this is where professional assistance is highly recommended. We are starting to see some of these schemes take up to 3 months to arrive in the bank, and much longer if there are errors in the application.
Just to give you a snippet of what is required to apply;
- 3 years accounts
- Cash flow forecast
- Profit and loss forecast
The list goes on! It needs to be finely packaged and preferably by an accountant. We now have a dedicated team to assist new and existing clients to apply for these loans.
With the deadline of January 31st looming, it is crucial to get your application in now. We will talk you through the process step by step and lighten your load as much as possible. Simply give us a call and we will take it from there!