Government loan schemes
As we recover from COVID, fintech companies are contacting business owners and offering to help them apply for government loans before they run out on 31 December 2021. They often say they are calling on behalf of the government and can adopt high pressure sales tactics or miss out crucial advice to business owners, when calling to 'arrange' loans for them. The implication is that these business loans are an opportunity not to be missed, because they are government backed.
Schemes such as the Bounce Back Loan (BBLS) and CBILS (Coronavirus Business Interruption Loan Scheme) have now ended, after serving their purpose during the peak of the pandemic. These were approved easily and quickly to get much needed cash into our economy and stop everything from grinding to a halt. As we move past this reactive period, we encourage members to think further ahead.
The latest and we believe, last government backed scheme, is the Recovery Loan Scheme (RLS). This provides financial support to businesses across the UK as they recover and grow following the pandemic.
It works in the same way as a normal business loan. The difference being, that where the lender would not normally offer terms to a business because of lack of worth in a Personal Guarantee or absence of business assets as security, the government will step in and provide a guarantee to allow the lender to approve the finance.
This loan still needs to be repaid in the same way as a normal business loan, and interest is still payable each month across the term of these business loans.
As the deadline approaches, telephone calls to local businesses informing them of the scheme and at times adopting high-pressure sales tactics to encourage businesses to apply, may only get worse.
If your business is recovering and growing again after the pandemic, you can apply for the scheme if you can afford the repayments from your cash flow. The finance can be used for any legitimate business purpose, including managing cashflow, investment and growth. As a Chamber, we urge members to take a moment to seek qualified advice before committing to any new business overheads such as long term interest payments. You should consider what the cash will be used for and how growth will be managed by your business, as poorly planned finance can quickly run out and become a liability.
Marc Hirst of Accountancy Bridge told us "An intermediary is not required to apply for the latest loan, you can apply direct and the process is generally quite straight forward. The British Business Bank website has a list of Recovery Loan Scheme backed accredited lenders. Many lenders have an online application process and offer a quick decision."
If you would like to discuss whether the loan is right for your business or would like to discuss financing for your business please contact your accountant or speak to Marc Hirst of Accountancy Bridge. Call him on 0333 772 9685 or email hello@accountancybridge.com. You are also welcome to visit their office on the upper floor of the Enterprise Centre next to the Railway Station. For eligibility criteria visit the Let's Do Business Group.
