Government ‘bounce back’ loans

On 27 April, the Chancellor announced a new loan scheme which is aimed at supporting micro-businesses.

A micro business is usually defined as a very small business that can be a company or a sole trader. In general, it must have any 2 of the following: a turnover of £632,000 or less. £316,000 or less on its balance sheet. 10 employees or less.

The potential problem is that legislation allows the definition to be set by government depending on what their needs are. This new legislation however is there to pick up the forgotten small ltd company owners who receive their income through dividends and were missed in the self-employed grant legislation. We of course need it to be about small private hire and chauffeur companies  who have been devasted by the fallout of the pandemic and have been missed, to give them the same chance as self-employed businesses to have the ability to ‘bounce back’.

This scheme will provide loans of between £2,000 and £50,000 for up to six years. The government will pay any interest on these loans for the first 12 months. No repayments will be due for the first 12 months. The scheme will also provide lenders with a 100% government backed guarantee, unlike the government business interruption loans known as CBILS at 80%

The following businesses are eligible to participate in this scheme…

  • Businesses based in the UK
  • Those businesses that have been negatively impacted by coronavirus
  • Were not classed ‘undertaking in difficulty’ on 31 December 2019

You also can’t apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

How Can You Get One?

You’ll be able to apply online using a short and simple two-page self-certification. form. Because the loan is entirely Government-backed, lenders will hopefully have the confidence to offer finance without the lengthy and complex red tape associated with CBILS and other loan schemes.

Firms applying for the new loans will only have to prove that they were viable in the past before the corona crisis, not that they will remain viable after the crisis.

The good news is that you will be able to access the cash within days.

There remains some concern that banks will still wish to assess the latest financials through a ‘cash available to service debt’ calculation. Where there isn’t sufficient cash to service the debt, there are fears that the loan may still not be granted despite the Government guarantee. Further clarification is expected from the government soon.

The scheme has been designed especially for small firms, including sole traders, that require ‘vital cash injections’ to help them operate during these challenging times. It will launch for applications from 9am on Monday 4 May and the loans will be provided through a network of accredited lenders.

The Government said that loans will be ‘advanced as quickly as possible’ and that they will agree a ‘low standardised level of interest for the remaining period of the loan’.

Rishi Sunak said the scheme will help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.

Words from The Government

The Chancellor of the Exchequer, Rishi Sunak, said:

Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.

This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses.

Business Secretary Alok Sharma said:

Our small businesses are vital in ensuring our communities thrive and will be crucial in creating jobs and securing economic growth as we recover.

Important information relating to the Self-Employed Income Support Scheme

Let’s just hope that it won’t have any hidden problems with the new loan scheme. The news just in on the Self-Employed Grant Is.

  • Accountants at the moment, will not be able to make the claim on behalf of their clients.  You will have to sign up to the government gateway in order to access the claim.
  • This will make the process a bit complicated and scary for many people Please then get your government gateway access as soon as possible or ask your accountant to help you get it. if you think you are likely to be able to claim.
  • WE are not supposed to file the claim under your credentials either Thankfully we are still awaiting further detailed on registering and many of our professional associations are lobbying hard to allow us to actually give you guys hands on help to do this.

Lots to think about and help to get for all driver sand small private hire businesses, you can go to our website for more help on Eazitax.co.uk/blog/coronavirus.

Stay Safe

Take a look at our other Coronavirus articles and advice