£50K Interest Free Loan for 12 Months

[ladymuck]

Whooohooo Cheltenham fund sorted


Sent from my iPhone using Contractor UK Forum

It's 25% of turnover - have you done any work lately or has it all been dynamite fishing and vodka drinking?

[DaveB]

You're right but ff you've got an offset mortgage at the moment you are probably already being bummed on the rate so whatever you save in the 12 months isn't much of a win in the bigger picture.

EDIT : That said there is some fair products about but that makes the savings even worse.

Remember though, with an offset if you don't take the the saving immediately by reducing your payments it creates an overpayment which will save you money over the life of the mortgage as well.

Best rates for offsets are around 1.85%

With £100,000 mortgage balance and 10 years left to run you'll create an over payment on the mortgage of £54 pm or £648 for the year. Monthly interest on £100k vs Monthly interest on £50k

Over the life of the mortgage that would save you another £132 in interest and £30 in tax you don't pay on the interest from the savings account linked to the mortgage. You're not going to easily be able to dump £50k into a risk free and tax free solution for a year so you'd end up paying tax on it as well as getting crap rate.

So about £800 for filling in a form and transferring some money from a to b.

If your mortgage is bigger, has longer to run or has a higher rate you'll save more.

[Hobosapien]

It's 25% of turnover

Not much of a lifeline then unless operating costs can be cut sufficiently to survive on effectively a quarter of the previous income.

I suppose they will have something in place to stop contractors already looking to close their Ltd from taking the loan based on their previous/current contract income, spending it all on 'research and plan B' that sadly failed and close the Ltd with no liability to pay the loan back.

I still fall through the cracks as I'm classed as a new self-employed business that hasn't yet submitted any accounts so no turnover to declare for loan purposes. I was thinking of using this loan to purchase some relevant assets as the firesale starts with many unviable businesses closing then pay it back out of savings if the interest rate makes it unattractive after the initial cost free 12 month period. Oh well, I'm sure the economy will bounce back soon.

[Andy Hallett]

Will allow all the businesses that contractors have been running relief

My take, spoiler alert - it's a no brainer for SME's

Andy Hallett posted on LinkedIn

[ladymuck]

Not much of a lifeline then unless operating costs can be cut sufficiently to survive on effectively a quarter of the previous income.

I suppose they will have something in place to stop contractors already looking to close their Ltd from taking the loan based on their previous/current contract income, spending it all on 'research and plan B' that sadly failed and close the Ltd with no liability to pay the loan back.

I still fall through the cracks as I'm classed as a new self-employed business that hasn't yet submitted any accounts so no turnover to declare for loan purposes. I was thinking of using this loan to purchase some relevant assets as the firesale starts with many unviable businesses closing then pay it back out of savings if the interest rate makes it unattractive after the initial cost free 12 month period. Oh well, I'm sure the economy will bounce back soon.

I had read in a news report that it was 25% of turnover but the press release on GOV.UK doesn't state that
Small businesses boosted by bounce back loans - GOV.UK

As with all these schemes, the devil will be in the detail

EDIT: and the link Andy references in his LI post also doesn't state the 25% limit. Where did that come from? I'm not saying it doesn't exist, I just can't find it officially stated.

Apply for a coronavirus Bounce Back Loan - GOV.UK

[ladymuck]

Will allow all the businesses that contractors have been running relief

My take, spoiler alert - it's a no brainer for SME's

Andy Hallett posted on LinkedIn

Jeans and jumper? You could have togged up a bit.

[Andy Hallett]

Jeans and jumper? You could have togged up a bit.

That's how I roll

PS The 25% of turnover was in Rishi's announcement to the Commons I believe.

[jamesbrown]

I had read in a news report that it was 25% of turnover but the press release on GOV.UK doesn't state that
Small businesses boosted by bounce back loans - GOV.UK

As with all these schemes, the devil will be in the detail

EDIT: and the link Andy references in his LI post also doesn't state the 25% limit. Where did that come from? I'm not saying it doesn't exist, I just can't find it officially stated.

Apply for a coronavirus Bounce Back Loan - GOV.UK

Chancellor announces new 'bounce back' loans for small businesses - News from Parliament - UK Parliament

[ladymuck]

Chancellor announces new 'bounce back' loans for small businesses - News from Parliament - UK Parliament

Super. It would be nice if all the official sites reporting this scheme could provide the same information...

[d000hg]

On the surface this sounds a big help for those struggling to get loans. Will the government guarantee it 100% for the life of the loan, or only the 12month interest-free period... if the former there is little reason for lenders to cause a fuss?

Is this not specifically for CV-affected businesses/people though? i.e. taking it just to make some interest on it is at best immoral?
Can just see the headlines "£100k earning contractor takes 50k loan to pay mortgage on 2nd house" - and then contractors wonder why they're targeted by HMRC
It's a loan to help you through tough times.