Categories
BBL Covid-19

Bounce Back Loans (BBL)

Should you consider applying for a Bounce Back Loan?

Here’s a fantastic guide to Bounce Back loans that will go over my following summarised points in much more detail, including a list of lenders and how to apply

Sole traders, is this something you should be applying for?

Please be aware, do not look at a BBL as a government grant or just extra cash, it must be considered and managed as a loan, as it rightly is. (clues in the name!)

If you just want extra cash, you’ll end up with less than you started off with.

However, if managed properly and used to clear existing debts, it may well be worth applying for.

While millions who work for themselves are covered by the Government’s income support scheme, huge swathes aren’t eligible and don’t get any help.

That includes those who started businesses after roughly September 2018, freelancers with only some self-employed work, those with profits over £50,000 and people who work for themselves via a limited company.

The bounce-back loans offer Small businesses struggling due to the coronavirus that may have been illegible for the current income support scheme’s (SEISS) a new 100% state-backed loan worth up to £50,000, with no interest charged or repayments needed in the first 12 months.

Bounce back loans DON’T affect your eligibility for other Government personal support.

You can still apply for a bounce-back loan and get the self-employment income support grants, and you may still be eligible for universal credit.

Bounce back loans can be used to repay any existing finance.If you have existing finance costs associated with your business such as vehicle, plant, stock, credit cards etc.

It is worth considering using this loan to pay off existing finance, to give yourself a year-long payment and interest holiday, followed by reduced cost in the longer term.

The lack of repayments and interest in the first year makes these loans far more attractive for a struggling business or struggling business owner than normal finance.

If things improve within a year, you can clear the loan before there’s any actual cost – and if it takes longer and there is a cost, it’s pretty cheap

Here’s a fantastic guide to Bounce Back loans that will go over my following summarised points in much more detail, including a list of lenders and how to apply

Here are the main points:

• You can borrow between £2,000 and £50,000. Though the amount is capped at 25% of your total turnover (usually for the calendar year 2019, or new businesses can estimate).

• No interest will be charged and no repayments will need to be made in the first 12 months.

• After 12 months, all banks will charge a fixed 2.5% annual interest. This is far cheaper than a typical personal loan.

• You can repay the loan early without penalty. Or with some banks, you can part-repay or overpay.

• The loans are set up to last for six years. So that’s a year interest-free and the rest at 2.5%. However, as you can repay at any time that gives you flexibility, of course, the sooner you repay once interest is charged, the smaller the overall cost. See how the loans are repaid.

• The loans are unsecured. While this sounds bad, it’s actually good. Secured loans include mortgages, where they can take your home if you don’t repay. Here you don’t give security (the Government does) so it’s far more difficult for them to take your assets if you can’t repay.

• Your business must have been established before 1 March 2020. It must also still be trading as a going concern (temporary cessation due to coronavirus doesn’t matter) at the point of application – and the reason for any issues must be due to coronavirus.

• Credit ratings (business or personal) won’t impact your eligibility – so most should be able to get these loans. You don’t need to prove the viability of your business and the application process is relatively straightforward.

• Bounce back loans DON’T affect your eligibility for other Government personal support. You can still apply for a bounce-back loan and get the self-employment income support grants, and you may still be eligible for universal credit.

• Bounce back loans can be used to repay any existing finance.

Thanks and a hat tip to Martin lewis and money-saving expert for providing a plethora of useful advice and insights.

Please contact me if you would like to discuss the viability of a BBL for your business.

Categories
Covid-19

Second SEISS Grant

We still do not have your Gov. login account details, we use an Accountants gateway!

SEISS – the Government grant to self-employed individuals whose businesses have been adversely affected by the coronavirus.

The Government’s Self-Employment Income Support Scheme will be extended and will pay out a second & final grant.

Applications for the second SEISS Grant are due to open on August the 17th.

You will have to confirm your business has been adversely affected on or after the 14th July 2020 on the application.

Here are useful examples of when you would be ‘adversely affected

This will be the final grant from the self-employment income support scheme. (SEISS)

You must make the claim yourself.

Your tax agent or financial adviser must not claim on your behalf as this will trigger a fraud alert.

You can apply for the Second Grant in the same way you applied for the first.

Those eligible will be able to claim the final grant in August, which will be worth up to 70% of their average monthly net profits, though it’s capped at £6,570 overall. 

Your net profit is your total income minus your total expenses, if you claimed a substantial tax rebate, you would have lower net profits, than someone on a similar income who received less of a tax rebate. 

The final Grant will be paid out in one single instalment.

Use Our Calculators to check your estimated Grant payments.


You can use our “First payment” calculator to estimate your second grant based on the amount of your first grant. 

Use Our Calculators to check your estimated Grant payments.


You can use our Annual net profits calculator to estimate both grants based on your net profits.


The eligibility criteria are the same for both grants, and you don’t need to have claimed the first grant to apply for the second grant. 

Here’s what you need to know about the second and final grant.


If you’re eligible for the scheme, you can apply here on the 17th of August.

Full information on eligibility criteria for the scheme can be found in this guide Coronavirus Self-Employed & Small Limited Company Help, but in brief:

• Your average trading profit must be less than £50,000/year. This is essentially a ‘cliff-edge’ requirement – so those whose average annual trading profit is more than £50,000 (to be specific, £50,000.01 and above) won’t be able to get any support from this scheme.

• You must earn more than 50% of your total income from self-employment. This must have been the case for either your 2018/19 tax return or, if not, the average of your 2016/17, 2017/18 and 2018/19 tax returns. Income from property, dividends, savings, pensions and taxable benefits all count as “non-trading income” and qualify for the SEISS. The total of these combined must NOT exceed 50% of your total income. For more information on which benefits count as “taxable income”, see our full list here.

• Grants are based on your profits over three tax years. They are based on an average of the tax returns for 2016/17, 2017/18 and 2018/19.

• You must have filed a tax return for 2018/19. This means you must have been self-employed prior to 6 April 2019. The last possible moment to file a 2018/19 tax return was Thursday 23 April (the deadline had been extended from 31 January 2020). If you only had a few months’ self-employment on your 2018/19 return, this will be counted as your total profit for the year – the Government won’t pro-rata it based on your monthly profits.


We still do not have your Gov. login account details, we use an Accountants gateway
!

Useful links and sources:

Examples of Adversely affected:
https://www.moneysavingexpert.com/news/2020/06/i-am-self-employed-but-confused-about-whether-i-can-claim-my-bus/

Eligibility Checker:
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Claim the Grant:
https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme

Details of Extension:
https://www.gov.uk/government/news/chancellor-extends-self-employment-support-scheme-and-confirms-furlough-next-steps

Full Guide:
https://www.moneysavingexpert.com/news/2020/04/self-employed-help-coronavirus/

Benefit Guide:
https://www.moneysavingexpert.com/news/2020/04/benefits-help-coronavirus/#benefits

Detailed Guide:
https://www.rossmartin.co.uk/covid-19/4632-covid-19-proposed-statutory-self-employment-pay-scheme

Our Blog:
https://blog.njb-taxback.co.uk/