£50K Interest Free Loan for 12 Months

[northernladuk]

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?

IMO you need stay well away from it.

[jamed]

IMO you need stay well away from it.

Well then when should a contractor with an LtdCo have use for this scheme?

[northernladuk]

Well then when should a contractor with an LtdCo have use for this scheme?

When they have a clue what's going on.

[jamed]

When they have a clue what's going on.

I'm assuming you can do with the loan whatever you would ordinarily do with the money you generate in your business, but wanted to confirm there wasn't something specific which said otherwise.

It seems there is not based on your simple response.

[simes]

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

Well he might still be working...

We know that you're not.

Please climb down off everyone. There's a good bunny.

[andydd68]

Surely you can do whatever you want with it..pay wages and/or top them up is an obvious one as many of us will otherwise only be getting £500 odd via CV Job Retention scheme.

Logged onto Barclays today to have a look at the process but seems its crashing for me and many others.

[ladymuck]

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?

It's quite generic - for improving cashflow, investment etc. Withdrawing as dividends probably isn't possible as income from a loan won't hit your P&L so you won't have the profits from which to pay them if they aren't there already.

[ScottW]

Are you sure it can be repaid early with no penalties?

I went through the HSBC process and it clearly said that I would be liable for interest if repaid within first 12 months.

As far as I can see if you repay it early you pay interest, if you go beyond a year.... you pay interest.

So at no point is this interest free.

Have I misread this ?

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..

[jamed]

It's quite generic - for improving cashflow, investment etc. Withdrawing as dividends probably isn't possible as income from a loan won't hit your P&L so you won't have the profits from which to pay them if they aren't there already.

Well I guess this complicates it a bit then if that's how you see it. Seeing as though most of us have LtdCo's with limited expenses, £700 a month salary and lunch etc when working, cash flow for day to day business is not really our main concern.

The main source of cash out-flow for contractor's Ltd's is their dividends they pay to the director/themselves so they can maintain their lifestyle and living expenses.

I do get that this scheme was intended for normal business's which is fairly different from most of our LtdCos purposes.

[jamed]

Are you sure it can be repaid early with no penalties?

I went through the HSBC process and it clearly said that I would be liable for interest if repaid within first 12 months.

As far as I can see if you repay it early you pay interest, if you go beyond a year.... you pay interest.

So at no point in this interest free.

Have I misread this ?

Hmmm the official website seems to indicate no early repayment charges? But might be based on waiting a year until paying it back.

"The length of the loan is six years but early repayment is allowed, without early repayment fees."

Bounce Back Loan Scheme (BBLS) - British Business Bank British Business Bank