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Bounce Back Loans

Bounce Back Loan & What To Expect 150 150 Stepping Stones Accountancy

Bounce Back Loan & What To Expect

This animated video provides details on what options are available now that Bounce Back loans are due to be repaid.

Struggling to Repay Your Bounce Back Loan | Advice on Bounce Back Loan | Help with Bounce Back Loan Repayments
Struggling to repay your Bounce Back Loan? 758 513 Stepping Stones Accountancy

Struggling to repay your Bounce Back Loan?

When Bounce Back Loans were introduced in March 2020, they were hailed as a lifeline for many businesses whilst the growing pandemic crisis was impacting their business. The loans enabled businesses to secure funding of up to £50,000 without providing a personal guarantee and in addition there was nothing to pay for 12 months. Many businesses took these out in good faith expecting life to return to normal in the foreseeable future. Who could have predicted though that all this time later, many businesses are still to return to pre-pandemic operating levels?

As increasing numbers of businesses approach that 12-month anniversary and are faced with the prospect of having to start repayments, the reality is that many of them are unable to afford them. So, what are the options if you find yourself in this situation?

Firstly, the government has thankfully recognised that this situation is faced by many businesses and that they still require help. As a result, they have introduced the Pay as You Grow (PAYG) Bounce Back Loan Scheme which provides three options:

  1. Delay payments for a further 6 months even if you have not made any repayments yet.
  2. Lengthen the term of your loan from 6 to 10 years, effectively halving your repayments.
  3. Make interest only payments for 6 months, ensuring you are not accumulating more interest as you would with a payment holiday.

However, unfortunately this is still not enough for some companies as they may have several other loans which are due for repayment.

One of the advantages of the Bounce Back Loan was that it was guaranteed by the government so that in the event of a business being unable to repay the loan, the bank could seek repayment from the government. However, this can only happen if your business is declared insolvent.

If your business is still viable and making profit though then restructuring and refinancing the loan may be a better option. Discussions with your creditors to lower your outgoings may also be feasible.

For those with numerous debts it may be possible to enter into a Company Voluntary Arrangement (CVA) with the agreement of all your creditors, this will enable you to make one monthly payment towards your debt over a set number of years with a portion allocated to each creditor.

If none of this is possible and you intend to liquidate your business, then your bounce back loan would be included in the process. You can be forced into liquidation by a creditor, which is a lengthy and complicated process or you can initiate the liquidation yourself, known as Creditors Voluntary Liquidation. Following liquidation, the company will cease to exist and all loans, including the Bounce Bank Loan, will be written off. You will not be held liable for the Bounce Back Loan if you have used them in the appropriate manner as dictated by the government in the terms. This means that the funds must benefit the business and not be used for personal reasons. If you are in any doubt as to whether you may have misused the funds, then you must seek expert guidance as soon as possible.

If you have any questions or would like to discuss this further please feel free to call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

State Aid & Covid-19 | Accountancy Support for Business in Bristol | What is State Aid | Can State Aid Help Me
State Aid & COVID-19 758 513 Stepping Stones Accountancy

State Aid & COVID-19

With the current COVID-19 crisis many businesses continue to seek government support to help them with the uncertainty of the months ahead. Whilst this aid is undoubtedly a lifeline for many, it could lead to potential problems in the future as businesses that benefit from such schemes can be said to be benefitting from State Aid.

Under EU legislation, a business can be said to be benefitting from State Aid if it receives aid from an EU member state which could distort competition and trade within the EU. This aid can be in the form of grants, tax breaks or loans and if it is deemed to be only available to certain sectors or industries, then it falls within this remit.

However, schemes that are universally available and not restricted to designated sectors or business size, such as the job retention scheme and deferral of VAT and income tax payments, are not classed as State Aid. Further, the business rates relief available for retail, leisure, hospitality and childcare nurseries are also not classed as State Aid, due to the colossal impact that COVID-19 has had on these sectors.

Monies received under the small business grants fund (SBGF) are classed as de minimis State Aid, providing that they fall under the ceiling of €200,000 over a rolling 3-year period, and as a result do not need EU approval. Though all companies benefitting from the SBGF are required to complete a declaration confirming that the aid does not exceed the threshold, including any previous non-COVID-19 related de minimis aid claims.

In order to support businesses in this tumultuous time, the EU have established a temporary framework within which several State Aid measures can be approved rapidly, whilst still being compatible with the EU’s internal market. The UK State Aid that sits under this temporary framework includes:

  • Retail, hospitality and leisure grant fund (RHLGF)
  • COVID-19 business interruption loan scheme (CBILS), interest and other direct payments
  • Bounce back loans
  • Statutory sick pay (SSP) reclaims
  • SBGF claims that exceed the de minimis cap (see below)

All of these measures are subject to a combined overall cap of €800,000 apart from the CBILS and Self-Employed Income Support Scheme.

If you have any questions on state aid feel free to call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk

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