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Business bounce back loans

Discussion in 'The Bar' started by twostepsbehind, May 18, 2020.

  1. diablo

    diablo Well-Known Member

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    Not being pedantic: just pointing out that it isn't the limited liability that protects borrowers. Even sole traders are offered protection by the government's guarantee that accompanies these loans.

    (The two posts should have appeared as one, but I couldn't get the double quote to appear in one post)
     
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  2. Domain Forum

    Acorn Domains Elite Member

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    IWA Meetup
     
  3. Ben Thomas

    Ben Thomas Well-Known Member

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    Okay, thanks for clearing that up. Confused me.
     
  4. pugyrob United Kingdom

    pugyrob Well-Known Member

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    Honestly I just disagree with so much of that post. Not allowed to use the money to grow a business??? Seriously?

    Inland revenue says "excuse me but you have used your business loan to grow your business. Against the rules" they are going to have someone come in and decide what is growing,saving and more with a business? Times about 1million businesses?

    Anyway. Good luck to all with or without loans....
     
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  5. Ben Thomas

    Ben Thomas Well-Known Member

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    Economic benefit in my eyes is anything that benefits the business economically, growth is just that.
     
  6. twostepsbehind United States

    twostepsbehind Active Member

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    According to Money Saving Expert you can use them to pay dividends and even a salary to yourself as a director - nothing dodgy about that...
     
  7. martin-s United Kingdom

    martin-s Well-Known Member

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  8. Ben Thomas

    Ben Thomas Well-Known Member

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    I don't agree, and the terms and conditions don't seem to agree with that statement either. This is a loan, it must be paid like any other. It's just a glorified business loan.
     
  9. Ben Thomas

    Ben Thomas Well-Known Member

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    I read the terms in it's entirety last night, from British Business Bank.
     
  10. JMI

    JMI Active Member

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    It's pretty obvious some will swindle the system on these loans and it will never be recovered.. more taxpayers money pissed away.
    To pretend everything will recovered and we all live happily ever after is naive - the Gov has not the resources or the time.
     
  11. Ben Thomas

    Ben Thomas Well-Known Member

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    Don't be concerned. The gov. no doubt have expected this. Income tax will go up, other taxes will go up, pay freezes and other things will recover (and then some) the debt they are assuming now. You're forgetting who we are dealing with, they are smart and calculating.
     
  12. JMI

    JMI Active Member

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    Yep.. the middle class will pay for it in the end. The tax dodging big boys won't care like the Branson's, Amazons, Googles - how the airlines like Virgin have the nerve to ask for bailouts is unreal.

    By printing all this money the government is borrowing from the future and shafting our kids to save the lifestyles of today..
     
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  13. Ben Thomas

    Ben Thomas Well-Known Member

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    Perhaps they know something we don't o_O
     
  14. geniejjc United Kingdom

    geniejjc Active Member

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    To answer the original question.

    If you're a limited company and you cant pay it back in 12 months you can always liquidate the company - no personal liability.

    And i suspect at least initially the bank will want to work with you.

    I broker insolvency - have done for 10 years.

    From numerous enquiries and conversations I`ve had regarding this with IPs as long as people dont just rip it out as a lump sum day 1 and dump it, then even if it just pays your wages for the next 12 months while you are trying to make a living that would be ok.

    Obviously if you are taking it out as dividends and there are no profits you run up your directors loan account which an IP or official receiver can ask you to pay back - so it may be better to take it as salary.

    Remember this is the cheapest business loan you will ever get, with little admin AND with no pg and we need the economy to grow.

    If you are a sole trader or partnership for me it gets a bit murky - but in my eyes they've left it open to be chased like an unsecured debt.and could affect your credit and sanity going forward.
     
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  15. twostepsbehind United States

    twostepsbehind Active Member

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    What about the turnover and the amount you can borrow? I imagine people may be tempted to be too optimistic...
     
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  16. Ben Thomas

    Ben Thomas Well-Known Member

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    No doubt, 25% of turnover isn’t it? I took £2000 out, I know this is the best loan I’m ever going to get in my life from HMRC, but I didn’t want to take the piss. I could’ve got 50 grand, But if everybody did that and thought like that, then the economy will certainly be screwed if it isn’t already
     
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  17. twostepsbehind United States

    twostepsbehind Active Member

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    I saw on the telly a hairdresser complaining of not getting her loan through yet and that she applied for £50k

    Would that be a potential option for banks to go after directors if they weren’t too accurate with turnovers
     
  18. boxfish United Kingdom

    boxfish Well-Known Member

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    You have a turnover of over £200k but borrowed £2000?

    Why?

    Seems a massively insignificant amount for a business of that size.
     
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  19. Ben Thomas

    Ben Thomas Well-Known Member

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    Absolutely not no. I’m just saying. I could have got £50k there’s nothing stopping me. All you have to do is agree that your turnover is surplus 200k.
     
  20. boxfish United Kingdom

    boxfish Well-Known Member

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    I think one of the reasons banks are only issuing loans to customers they had an existing relationship with is so they can verify their stated turnover with their accounts. I'm sure some don't match and need further info/proof but I don't think it's as easy as saying your turnover is over £200k and them handing over the money.
     
  21. Alan Fletcher United Kingdom

    Alan Fletcher Member

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    Hello, just seen this thread - I've worked in banking/lending at a senior level for 20 years, and I'm currently involved in arranging CBILs/CLBILS and CFFs.

    BBLS or "bounce back loans" - very different beast to the above, small loans unsecured business loans - I think 11 banks offer them including ourselves. The criteria is slightly different at each bank, but the core requirements remain the same.

    It's not a deep dive underwrite, it's an unsecured business loan, designed to be repaid over 6 years aimed at SMEs. There is still however a due diligence process applied on the applicant's application as per the FCA directives, AML checks etc.

    The government are doing 2 things - covering the interest for year one (the first 2.5%) + and providing a limited PG to the bank. (Rather than some of the more complex products listed above where an unlimited PG is required from the borrower, and there is a full underwrite into company structure/accounts, measured against each individual lenders criteria, CBILs for instance.)

    Essentially - it is open to abuse - and the lenders have hedged for that in the deal they have done with the government, that's what the government are providing - a guarantor service against a proportion of the loss essentially.

    The criteria is minimal, as long as the metrics fit, the checks are passed, and the correct usage is evidenced - off you go. The banks - want to lend these loans out, it's like betting in a casino, and the house refunding the losing bets. The only way it can go wrong for the banks is if the overall tranche of BBLs they hold - becomes completely non-performing.

    Usually, you expect 15%-20% of your book to be, shit essentially - in this instance, it will be 50% + total dogshit, a huge amount of these businesses will fold.

    For people that do cut and run - well, the same thing happens as if you have just defaulted on a standard unsecured bank loan, it goes down the collections route and into the county courts and you have the guys from "can't pay, we'll take it away" turn up, hence why a lot of the businesses will fold and the directors will run off.

    Hope that helps!
     
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