£50K Interest Free Loan for 12 Months

[jamed]

We've been talking at great length about this for awhile now. How come this is news to you?

I read it that the 2.5% was the cap, but now it seems that is the going rate for all.

Based on that % is this still a loan that many think is beneficial for a 6-year term?

[northernladuk]

I read it that the 2.5% was the cap, but now it seems that is the going rate for all.

Based on that % is this still a loan that many think is beneficial for a 6-year term?

We can't tell you that. It's based on your personal circumstances. Do you need a 50k loan for 6 years? If you do then yes, if you don't then no.

This is a lot of money with conditions applied. You need to be a bit smarter than this.

[northernladuk]

HSBC seems to have a working page. Just about to have a look at the application form.

Bounce Back Loan Scheme | Commerical Banking | HSBC UK

Santander has it up as well I believe...

Bounce Back Loan Scheme (BBLS) | Santander Corporate & Commercial Banking

[jamesbrown]

I read it that the 2.5% was the cap, but now it seems that is the going rate for all.

Based on that % is this still a loan that many think is beneficial for a 6-year term?

The ceiling was always going to be the floor; that's how banks work.

I couldn't apply anyway (no discernible covid impact in my specialism) but, even if I could, I wouldn't bother unless it could be paid back in full after 12 months (seems unlikely) or I had a business idea that would likely return very substantially more than 2.5% (but if I had that, I would've punted already). So, nah, waste of time from my POV. I'm sure there are some that are desperate for money from any source though.

[jamed]

The ceiling was always going to be the floor; that's how banks work.

I couldn't apply anyway (no discernible covid impact in my specialism) but, even if I could, I wouldn't bother unless it could be paid back in full after 12 months (seems unlikely) or I had a business idea that would likely return very substantially more than 2.5% (but if I had that, I would've punted already). So, nah, waste of time from my POV. I'm sure there are some that are desperate for money from any source though.

I thought maybe banks might try "compete" for more business by lowering the rates but I guess not

It sounds like it can be repaid early with no penalties though?

I'm tempted as I will then be able to pay my corporate tax charge and not worry if the next few months continue being a slow job market.

I guess at the end of the day it's helpful to have more money than needed rather than less. Assuming one doesn't overspend and be unable to pay it back..

[northernladuk]

I thought maybe banks might try "compete" for more business by lowering the rates but I guess not

Time to do some reading and less thinking then...

I'm tempted as I will then be able to pay my corporate tax charge and not worry if the next few months continue being a slow job market.

I'd look at it the other way around. Your company pays the taxes it owes with the money put aside and the loan helps you put food on the table after. Don't be spending the tax money and using loans etc to cover it. Use the loans to pay you after you've settled your debts properly.

It's a pedantic point but just a slight change in thinking that might stop you getting in to trouble one day.

[ladymuck]

I've applied because I'm wary of my client making timely payments - I'm sure they will pay but I want an extra buffer just in case. If I end up not needing it, I will just repay when I feel there's a sense of normality returning. There's no fees for early repayment which was the deciding factor for me.

I don't have any taxes to worry about as this year's CT was due on 1 May and I earned over £8 in interest from HMRC by paying that in instalments over the past 6+ months. VAT is just going to plod along as usual.

I've also added a post to the Resources thread about the scheme.

[ladymuck]

I thought maybe banks might try "compete" for more business by lowering the rates but I guess not

It sounds like it can be repaid early with no penalties though?

I'm tempted as I will then be able to pay my corporate tax charge and not worry if the next few months continue being a slow job market.

I guess at the end of the day it's helpful to have more money than needed rather than less. Assuming one doesn't overspend and be unable to pay it back..

HMRC still has their time to pay scheme running that has always been there for businesses having trouble meeting their tax commitments. You may find it's helpful to ask to pay in instalments so that you pay something towards it but not necessarily the full amount while you're uncertain how things are going and therefore can keep the bulk of the loan towards other costs.

[jamed]

Any idea of what the "requirements" are of how to spend the money? We are obviously mostly seeing this in a different light to how it was really intended for, being SME's with multiple employees etc trying to keep the actual business afloat.

I mean could we use it to pay dividends/director loans for instance?

[jamed]

HMRC still has their time to pay scheme running that has always been there for businesses having trouble meeting their tax commitments. You may find it's helpful to ask to pay in instalments so that you pay something towards it but not necessarily the full amount while you're uncertain how things are going and therefore can keep the bulk of the loan towards other costs.

I did get a 3 month extension although they said it will still accrue interest. Makes sense to pay it off ASAP if I can an interest-free loan for a year through this scheme.