So it has been a very stange time for all of us since I last posted. Some clients received their £10,000 and £25,000 grants quickly whilst others, unfortunately, are still waiting.
Furlough claims were easy to process, in my opinion and landed in bank accounts quickly. Some of the calculations were difficult to make and judgements had to be made. The guidance was vague at times and not all situations fit into the boxes. Even accountants have different interpretations of the guidance.
Most clients who have direct debits set up to pay their VAT will have cancelled it for now, to take advantage of the deferral and assist their cashflow.
People found the Coronavirus Business Interruption Loan Scheme (CBILS) a little more difficult to access. I guess that is why the government recently announced the introduction of the new Bounce Back Loan for small and medium sized businesses. It launches on 4th May! So lets hava a look at the Bounce Back Loan.
Who can apply?
You can apply if your business:
- is based in the UK
- has been negatively affected by coronavirus
- was not an ‘undertaking in difficulty’ on 31 December 2019
There are some businesses, which cannot apply:-
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
How much can you borrow?
Between £2,000 and £50,000.
What are the terms?
There will be no fees to pay and no interest for the first 12 months.
The government will guarantee 100% of the loan.
Loan terms will be upto 6 years and there will be no repayments in the first 12 months.
However you should read all the terms and conditions carefully when you apply, especially the interest rates after the 12 month period and any guarantees that you are expected to give.
What if I have already applied for CBILS?
Then you cannot apply for the Bounce Back Loan. However, once you have received your CBILS, you can transfer it to the Bounce Back Loan Scheme. You must do this by 4 November 2020.
Moving forward
Cash flow is vital but you also need to review your situation and consider whether borrowing is the best move for your business. Your business needs to be strong when we move forward again and you do need cashflow. Nevertheless debt can become a problem, if not evaluated carefully.