To help smaller Limited Companies, Partnerships and Sole Traders get through and recover from the current pandemic, the Government launched the ‘Bounce Back Loan Scheme’ for loans between £2,000 and a maximum of £50,000 over 6 years. There’s no set-up fees and the first 12 months is interest on capital repayment free.
The Scheme is open to most businesses, regardless of turnover, who meet the eligibility criteria and who were established on or before 1 March 2020. Businesses are required to fill in a short online application form and self-declare that they are eligible for the Scheme and, where possible, should approach their own Bounce Back Loan Scheme accredited provider. The Scheme will be available through the British Business Bank’s accredited lenders and the Government will cover the interest repayments for the first 12 months and back the guarantee to lenders. Businesses remain 100% liable to repay the full loan amount, as well as interest, after the first year.
What can I use the loan for?
The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes. If the business was a ‘business in difficulty’ on 31 December 2019, then a loan under the Scheme is not permitted to be used for export-related activities. There are no limits on the amount of the facility that can be used for refinancing.
Can I repay early?
Early repayment is permitted at any stage, without early repayment fees. If you are worried about when you come to repay the loan please contact one of our advisers and they will give you more information about this.
Pay your Corporate Tax early by taking out the Bounce Back Loan
If you have an upcoming corporation tax bill and you don’t know whether or not to take your bounce back loan, we would advise you do so. You can take the £50,000 loan, which is interest free for 12 months and pay off your corporation tax bill. Using this strategy you will have a loan which is free of interest for 12 months whilst earning 0.5% interest on the amount of early corporation tax you have paid.
If you would like to have any further information on Bounce Back Loans, please don not hesitate to call us on 01384 376964
Folkes Worton – Accounting for the Future