Over the last few months, a package of financial support for individuals and businesses has been announced by the UK Chancellor, Rishi Sunak. The goal has been to create a range of measures to keep the economy moving amid the Covid 19 chaos, with the Bounce Back loan scheme being introduced in May. It was developed to aid small-scale businesses who may not have had the resources to weather the lockdown and reduced footfall, and who might not have qualified for the schemes aimed at helping larger outfits.
Bounce Back Loans Offer Low Interest Rates Following An Interest Free Period
Businesses can apply for a Bounce Back loan to cover up to a quarter of their usual annual turnover, anything between £2000 and £50,000. No repayments need to be paid for the first 12 months and no interest is charged in this period. Following the interest-free year, the annual interest will be at a fixed rate of 2.5%; offering better terms than the majority of personal loans that are currently available. The standard loan term is six years, although there is no penalty for early repayment so you have some control over how much interest you will end up paying overall.
With the government backing the loan instead of it being secured against business assets, business owners can feel reassured that it would be very difficult for your personal assets to be taken away should you be unable to keep up with repayments. Your personal or business credit history doesn’t form part of the application or the decision-making process, and there is no requirement to prove your business’ viability. The hope is that keeping the application process straightforward will enable quick access to funds for those who need it.
Modify & Adapt Your Business To Meet New Needs Since The Coronavirus Pandemic
These loans have enabled beneficiaries to make investments to allow safe reopening, or to diversify their current processes to enable them to continue trading. This has been through the creation or growth of online marketing teams; investing in stock and packaging, hiring staff to focus on an online presence, creating jobs for additional warehouse staff and making courier links. Some have used their funds to cover outstanding invoices. Others have invested in supplies of protective equipment or made necessary physical changes to adhere to social distancing requirements – all things that many businesses would not be able to do following a period of reduced income or temporary cease in trade.
The Bounce Back Loan scheme is just one part of a whole package of pandemic support measures, designed to help individuals and businesses who are feeling the negative effects which Coronavirus has brought about. Receiving this particular loan does not disqualify you from receiving other forms of support that are available, for example self-employed income grants or universal credit.
The Chancellor has expressed his ‘delight’ at surpassing the million loan mark, taking pride in the fact that the treasury has already paid out over £35bn for this particular scheme. This figure is expected to continue rising – with applications open until the 4th November 2020 there is still time for others to benefit.
Many entrepreneurs are starting up new businesses during this trying time, and the Covid 19 pandemic has encouraged a small business boom, with small, local businesses all over the UK seeing an increase in demand, particularly online. For help setting up your own company or advice reinventing your offering for a post-pandemic market as well as first class accounting services, get in touch with the experts at Neil Smith Accountancy for a free consultation. Call 01621 841 233 or 01376 512 637, or email enquiries@neilsmithaccountancy.co.uk and see what we can do for you.