Originally written by Timothy Adler on Small Business
Rishi Sunak has extended the UK’s £68bn coronavirus emergency financial support including the Bounce Back Loan Scheme until the end of March.
The Bounce Back Loan Scheme, the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme had all been due to close at the end of January.
With swathes of southern England joining the north in Tier 3 lockdown, effectively shutting down pubs and restaurants, the Treasury needed to support small businesses which face months with much-reduced or no revenues.
The Treasury said: “We are extending the schemes now, ahead of Christmas and further into the new year, to ensure that businesses can continue to access the support they need to grow and recover.”
The loan schemes provide guarantees for banks to lend quickly and cheaply to struggling businesses during the pandemic. The Bounce Back Loan Scheme (BBLS) carries a full guarantee from the government for up to £50,000, while the others have a guarantee which covers the banks for about 80 per cent of the value of the loan.
However, the government itself has admitted that 60 per cent of Bounce Back Loans will never be repaid, leaving the taxpayer facing a
Tag Archive for Business loans
Hot Business News Today
Bounce Back Loan Scheme extended until the end of March
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Rishi Sunak has extended the UK’s £68bn coronavirus emergency financial support including the Bounce Back Loan Scheme until the end of March.
The Bounce Back Loan Scheme, the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme had all been due to close at the end of January.
With swathes of southern England joining the north in Tier 3 lockdown, effectively shutting down pubs and restaurants, the Treasury needed to support small businesses which face months with much-reduced or no revenues.
The Treasury said: “We are extending the schemes now, ahead of Christmas and further into the new year, to ensure that businesses can continue to access the support they need to grow and recover.”
The loan schemes provide guarantees for banks to lend quickly and cheaply to struggling businesses during the pandemic. The Bounce Back Loan Scheme (BBLS) carries a full guarantee from the government for up to £50,000, while the others have a guarantee which covers the banks for about 80 per cent of the value of the loan.
However, the government itself has admitted that 60 per cent of Bounce Back Loans will never be repaid, leaving the taxpayer facing a
Hot Business News Today
Writing off Bounce Back Loans would be best thing to do, say accountants
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Writing off the £42bn worth of Bounce Back Loans that have been issued to small businesses is going more effective in the long-run than chasing debts which will never be repaid.
So says accountancy association the AAT, responding to the withering assessment of MPs investigating the Bounce Back Loan Scheme (BBLS).
Nearly two thirds of Bounce Back Loans, designed to help small businesses survive Covid-19, may never be repaid, according to the government’s own figures. That would leave the taxpayer staring at a loss of £26bn.
>See also: Europe’s small businesses call for three-month post-Brexit transition period
Writing off the entire £42bn worth of Bounce Back Loans would save the government £1bn in interest payments alone paid to banks while they chase bad debtors, and free up banks not to waste time working with costly debt recovery agencies.
Back in June, ex-chancellor George Osborne said that all emergency Covid-19 financial support should be written off – an assessment the AAT agrees with.
Taxpayers are facing a hit of up to £26bn because the government failed to “strike the right balance” between rescuing companies and protecting the public purse with an emergency loan scheme, MPs have warned.
>See also: Government plans
Hot Business News Today
Writing off Bounce Back Loans would be best thing to do, say accountants
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Writing off the £42bn worth of Bounce Back Loans that have been issued to small businesses is going more effective in the long-run than chasing debts which will never be repaid.
So says accountancy association the AAT, responding to the withering assessment of MPs investigating the Bounce Back Loan Scheme (BBLS).
Nearly two thirds of Bounce Back Loans, designed to help small businesses survive Covid-19, may never be repaid, according to the government’s own figures. That would leave the taxpayer staring at a loss of £26bn.
>See also: Europe’s small businesses call for three-month post-Brexit transition period
Writing off the entire £42bn worth of Bounce Back Loans would save the government £1bn in interest payments alone paid to banks while they chase bad debtors, and free up banks not to waste time working with costly debt recovery agencies.
Back in June, ex-chancellor George Osborne said that all emergency Covid-19 financial support should be written off – an assessment the AAT agrees with.
Taxpayers are facing a hit of up to £26bn because the government failed to “strike the right balance” between rescuing companies and protecting the public purse with an emergency loan scheme, MPs have warned.
>See also: Government plans
Hot Business News Today
Government plans permanent state-backed small business loan scheme
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The government is planning to replace existing coronavirus business support with a permanent state-backed small business loan scheme.
Under the plan, which would be launched in January, the government would guarantee 80 per cent of loans to small businesses, ranging from a few thousand pounds up to £10m per company over a six-year lending period.
In effect, the new state-backed SME loan scheme would extend the Coronavirus Business Interruption Loan Scheme (CBILS) but with a lower threshold. The minimum CBILS loan is £10,000.
>See also: Treasury eyes hitting self-employed gig workers with VAT charge
According to the Financial Times, the banks would set their own interest rate for their loans, but the rate is likely to be capped at about 15 per cent – just like the CBILS – which is far higher than the 2.5 per cent fixed interest rate of the parallel Bounce Back Loans Scheme (BBLS).
Research by our sister title GrowthBusiness found that lenders are charging anything between 3 per cent and 15 per cent for CBILS loans.
As of last month, the CBILS and the BBLS have lent £60.64bn to struggling businesses between them.
And the new state-backed SME lending scheme would have more stringent
Hot Business News Today
Government plans permanent state-backed small business loan scheme
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The government is planning to replace existing coronavirus business support with a permanent state-backed small business loan scheme.
Under the plan, which would be launched in January, the government would guarantee 80 per cent of loans to small businesses, ranging from a few thousand pounds up to £10m per company over a six-year lending period.
In effect, the new state-backed SME loan scheme would extend the Coronavirus Business Interruption Loan Scheme (CBILS) but with a lower threshold. The minimum CBILS loan is £10,000.
>See also: Treasury eyes hitting self-employed gig workers with VAT charge
According to the Financial Times, the banks would set their own interest rate for their loans, but the rate is likely to be capped at about 15 per cent – just like the CBILS – which is far higher than the 2.5 per cent fixed interest rate of the parallel Bounce Back Loans Scheme (BBLS).
Research by our sister title GrowthBusiness found that lenders are charging anything between 3 per cent and 15 per cent for CBILS loans.
As of last month, the CBILS and the BBLS have lent £60.64bn to struggling businesses between them.
And the new state-backed SME lending scheme would have more stringent
Hot Business News Today
A guide to getting a business loan during Covid-19
by fundingoptions • • 0 Comments
Originally written by fundingoptions on Small Business
The government’s CBILS and BBLS initiatives are helping SMEs across the UK to access a Covid-19 business loan. On November 2, the Government announced that the Coronavirus Business Interruption Loan Scheme (CBILS) will be extended until January 31 2021.
How do I apply for a government-backed loan?
Applications for the government backed loans schemes – including BBLS and CBILS — will be open until January 31 2021. Companies will have the option to repay their loans over 10 years via a “pay as you grow” initiative. If a business finds itself in “real trouble”, six-month interest-only payments and payment holidays are available.
Currently, there are over 100 accredited lenders providing finance to businesses through the CBILS scheme. Funding Options is partnered with 40 plus of them and you can use our platform to apply for a CBILS loan. The benefit of applying through an accredited partner like Funding Options is that a finance Specialist will help guide you through the process.
What do I need to apply?
Firstly, you must be a UK-based business to apply for government-backed support. For a BBLS loan the lender will ask you to submit a short online application form and self-declare that you’re
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How to get a bridging loan quote
by fundingoptions • • 0 Comments
Originally written by fundingoptions on Small Business
If you require a short-term business loan to get your business from A to B, bridging finance might be just the thing you need. Use Funding Options’ bridging finance calculator to find out how much you may be able to borrow in the form of a bridging loan. We’ll ask for some basic information on how much you want to borrow, when you need the funds, what the finance is for (e.g. “property finance”) and your email address so we can provide you with your bridging loan quote.
Some business owners are unaware of the benefits of bridging finance and others are unsure of what it’s actually for. Read on to find out more about this unique type of business finance.
>See also: Common uses for bridging loans
What is a bridging loan?
Bridging loans are designed to “bridge a gap” in finance. Bridging loans can often be quicker to obtain than term loans; in some cases the funding can be ready in 24-48 hours. There are two main types: closed and open.
Closed bridging loans have a fixed repayment date (within a few months) whereas open bridging loans have no fixed repayment date, however lenders usually expect repayment within a year.
As
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Which type of bridge financing is right for your business?
by Partner Content • • 0 Comments
Originally written by Partner Content on Small Business
The idea that bridge financing can only be used to purchase or renovate property is a common misconception. In fact, businesses can utilise bridging loans for a wide variety of purposes.
Bridge finance can prove useful when your company is in need of a speedy cash injection. It can be used to help you meet finance obligations in the short term and provide a vital cash flow boost while you wait for longer-term funding to become available.
As with any business loan, you’ll have to meet the lender’s eligibility criteria. You’ll also be asked for your business plan and exit strategy when you apply for bridging finance.
>See also: Exploring finance: How appropriate debt choices can fuel ambitions
Let’s take a look at the different types of bridging finance available today:
Closed bridge loan
A closed bridge loan has a fixed repayment date, which is usually a few months after you receive the finance. As the lender has a higher level of certainty in terms of when the loan will be repaid, closed bridge loans tend to be more accessible.
Open bridge loan
Open bridge loans, on the other hand, have no fixed repayment date. This can make them more suitable
Hot Business News Today
Banks may call in debt collectors to recoup unpaid Bounce Back Loans
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Banks may outsource repayment of Bounce Back Loans gone bad to external debt collectors because the task will prove too overwhelming inhouse.
The government itself estimates that nearly two thirds of Bounce Back Loans may never be repaid, costing the Treasury £26bn.
Government and the banks are talking about establishing a panel of debt collection agencies that would all follow an agreed code of practice.
>See also: HSBC will not accept any more Bounce Back Loan applications
According to the Times, government officials have already contacted debt collection agencies including Arrow Global to see whether they would chase unpaid Bounce Back Loans. Only when the agency has exhausted chasing repayment would the bank then claim on the 100-per-cent state guarantee.
Lenders say they would have to hire hundreds of staff and build dedicated loan recovery call centres to cope with the volume of bad debts.
Bounce Back Loans are due to start being repaid in May.
Of course, high street lenders have outsourced bad debt collection for years. The collection agency chases the bad loan on a contingency basis, keeping a percentage of any loan repaid as a fee. A large percentage of businesses owing banks money settle immediately once