Bounce back loan

[wpchris]

1. If you take this out for a LTD company, does it go into the LTD company business bank account?
2. Do you pay corporate tax on the money when it comes in (is it income)?
3. Can you use the money from the loan to pay yourself as a director and employee of the LTD company (in salary or wages)?

Thanks

1. Yes
2. No, it is a loan, you are borrowing money to pay back. It is not profit.
3. Yes, but you shouldn't be giving yourself a payrise, etc.

 

[Mancunian]

1. If you take this out for a LTD company, does it go into the LTD company business bank account?
2. Do you pay corporate tax on the money when it comes in (is it income)?
3. Can you use the money from the loan to pay yourself as a director and employee of the LTD company (in salary or wages)?

Thanks

1. Yes.
2. No. It's a loan.
3. Yes.

 

[The Soup Dragon]

Good to hear re HSBC. I, however, am yet to receive any communication whatsoever.

Starting to wonder if my application didn't submit properly.

Mate of mine applied 24 hours after me ( HSBC)

He has the money and we haven't heard anything!

 

[gpietersz]

3. Yes.

That sounds a bit worrying. What if people just pay all the money straight out to themselves? Nothing to stop that?

 

[wpchris]

That sounds a bit worrying. What if people just pay all the money straight out to themselves? Nothing to stop that?

Then their tax return will catch up with them at some point.

& they'll be paying 2.5% on their past salary for 5 years

 

[BusterBloodvessel]

I’ve heard absolutely zilch from HSBC - and that’s only waiting for the feeder account, I haven’t been able to actually make the loan application yet! Very disappointed to not even receive an acknowledgement email or anything.

questions from a couple of friends (no, honestly!) who I have been encouraging to use this.

1. Has anyone had any success with Lloyd’s? One friend applied on Wednesday evening but again hasn’t heard anything at all.

2. One friend is a Ltd company director but also registered as self employed with HMRC for a different line of work. In theory, is there anything to stop him applying for a company BBL, and also a personal one against self employed earnings?!?

 

[wpchris]

I’ve heard absolutely zilch from HSBC - and that’s only waiting for the feeder account, I haven’t been able to actually make the loan application yet! Very disappointed to not even receive an acknowledgement email or anything.

questions from a couple of friends (no, honestly!) who I have been encouraging to use this.

1. Has anyone had any success with Lloyd’s? One friend applied on Wednesday evening but again hasn’t heard anything at all.

2. One friend is a Ltd company director but also registered as self employed with HMRC for a different line of work. In theory, is there anything to stop him applying for a company BBL, and also a personal one against self employed earnings?!?

1. Two friends of mine applied via Lloyds last week - had the money by Friday

2. They are separate legal entities. You could apply for 10 if you were registered as self-employed + Director of 9 LTD companies. It is that simple.

 

[anonuk]

2. One friend is a Ltd company director but also registered as self employed with HMRC for a different line of work. In theory, is there anything to stop him applying for a company BBL, and also a personal one against self employed earnings?!?

The criteria specifies that at least 50% of his annual income (including salary, dividends, Self Employed) must come from his self employed earnings in order to qualify for a loan as self employed.

 

[wpchris]

The criteria specifies that at least 50% of his annual income (including salary, dividends, Self Employed) must come from his self employed earnings in order to qualify for a loan as self employed.

True. I imagine there will be a lot of new LTDs not paying out yet (salary) combined w/ self-employed earnings out there, which will make a lot of people eligible off the bat for both if they were moving to LTD status.

 

[anonuk]

True. I imagine there will be a lot of new LTDs not paying out yet (salary) combined w/ self-employed earnings out there, which will make a lot of people eligible off the bat for both if they were moving to LTD status.

Very true and it will go the other way too (people starting additional businesses as sole trader). Hopefully such people will remember though that ultimately this is a loan. Using a technicality to get two loans might seem like an excellent idea now but when you have two loans at upwards of £900 per month EACH to pay back, it will be a whole other story.

 

[BusterBloodvessel]

thanks! He did only apply Wednesday night so maybe he’ll hear something in the next couple of days.

 

[Ian J]

That sounds a bit worrying. What if people just pay all the money straight out to themselves? Nothing to stop that?

There is on HSBC's application form:-

We undertake to use the credit granted on the basis of this agreement only to provide economic benefit to my/our business, for example, providing working capital, or investing in my/our business. I/we also confirm that the Bounce Back Loan will be used wholly for business purposes and not personal purposes.

 

[Mancunian]

There is on HSBC's application form:-

We undertake to use the credit granted on the basis of this agreement only to provide economic benefit to my/our business, for example, providing working capital, or investing in my/our business. I/we also confirm that the Bounce Back Loan will be used wholly for business purposes and not personal purposes.

There is quite a detailed article by Martin Lewis on MSE about BBL, and he covers this particular topic in some depth.

I would post a link, but still unable to.

 

[gpietersz]

The link @Mancunian posted is interesting:

https://www.moneysavingexpert.com/news/2020/05/small-business-boost-as-bounce-back-loans-launched/

It says that they have confirmation from the Treasury that you can use it to support your income but I find that hard to reconcile with what @Ian J quotes which is part of the BBL rules.

If what they mean by confirmation from the Treasury is the answer to the first question in the Q & A section then I wonder whether his interpretation is a bit optimistic:

Our Bounce Back Loan Scheme will ensure that small firms who need vital cash injections to keep operating can get finance with a 100% Government-backed guarantee in a matter of days, with thousands of loans approved already today. The loan can be spent on investment or working capital for the business – including bills, running costs and wages​

 

[wpchris]

The link @Mancunian posted is interesting:

It says that they have confirmation from the Treasury that you can use it to support your income but I find that hard to reconcile with what @Ian J quotes which is part of the BBL rules.

If what they mean by confirmation from the Treasury is the answer to the first question in the Q & A section then I wonder whether his interpretation is a bit optimistic:

Our Bounce Back Loan Scheme will ensure that small firms who need vital cash injections to keep operating can get finance with a 100% Government-backed guarantee in a matter of days, with thousands of loans approved already today. The loan can be spent on investment or working capital for the business – including bills, running costs and wages​

I think the whole idea here is to keep a business running that has exhausted/isn't eligible for other funding (ie, rates grant and so on) - if it means keeping the payroll going along with other things, that is fine.

What they won't want is for people to take out the loan and then be giving themselves a hefty payrise the next month I expect

 

[Gordon - Commercial Finance]

The link @Mancunian posted is interesting:

https://www.moneysavingexpert.com/news/2020/05/small-business-boost-as-bounce-back-loans-launched/

It says that they have confirmation from the Treasury that you can use it to support your income but I find that hard to reconcile with what @Ian J quotes which is part of the BBL rules.

If what they mean by confirmation from the Treasury is the answer to the first question in the Q & A section then I wonder whether his interpretation is a bit optimistic:

Our Bounce Back Loan Scheme will ensure that small firms who need vital cash injections to keep operating can get finance with a 100% Government-backed guarantee in a matter of days, with thousands of loans approved already today. The loan can be spent on investment or working capital for the business – including bills, running costs and wages​

There's also a bit from the treasury Q&A saying that the loan can be paid out as a dividend....

 

[ADW]

There's also a bit from the treasury Q&A saying that the loan can be paid out as a dividend....

That sounds like a bit of a minefield considering the rules on taking Dividends. Whilst the grant might be able to be added as income increasing profits the loan I would assume cannot.

 

[HostMamba]

For anyone who is waiting, seems like Starling just went live with their application process for existing Business Banking customers.

 

[gpietersz]

There's also a bit from the treasury Q&A saying that the loan can be paid out as a dividend

But only if you have retained profits - i.e. the loan can be used to provide cash flow for the dividend but the dividend has still to be paid out of retained profits.

 

[RockNRollaaa]

I've just applied with Starling. I'm actually crapping myself as this means so much to me and I'm going to be devastated if I'm not accepted. I've got a plan B but it means giving away a significant part of something I've worked so hard for (like all of us, of course).

I'm anxious and I don't get anxious like this!

Good luck to everybody, let's hope today brings us some good news.

 

[cash_is_king]

I know this was touched on previously in this thread, but wanted to get some more thoughts. Through Santander BBL application this is in the clause:

G. Purpose
You may not use your loan to finance the purchase or hire of fixed assets, other than to replace existing assets with equivalent assets. The loan must be used wholly for the purpose of your Business and not for any personal or other non-business purpose.

So i would ONLY be using this loan to acquire assets within the business AND within my spectrum of money making knowledge OUTSIDE of the business. Then Pay back the loan asap. And I’m left with an asset acquired for free.

Questions

1. If it will help pay the money back, what do they care where I’m putting the money?
2. How will they check where I’m investing the money?
3. The way I see it, by using the money to make more money and therefore able to pay my team wages for longer I’m doing good for the economy so I’ll use the money how I see fit.

Thoughts guys?
Thanks in advance
J

 

[Mark T Jones]

I know this was touched on previously in this thread, but wanted to get some more thoughts. Through Santander BBL application this is in the clause:

G. Purpose
You may not use your loan to finance the purchase or hire of fixed assets, other than to replace existing assets with equivalent assets. The loan must be used wholly for the purpose of your Business and not for any personal or other non-business purpose.

So i would ONLY be using this loan to acquire assets within the business AND within my spectrum of money making knowledge OUTSIDE of the business. Then Pay back the loan asap. And I’m left with an asset acquired for free.

Questions

1. If it will help pay the money back, what do they care where I’m putting the money?
2. How will they check where I’m investing the money?
3. The way I see it, by using the money to make more money and therefore able to pay my team wages for longer I’m doing good for the economy so I’ll use the money how I see fit.

Thoughts guys?
Thanks in advance
J

As I've said before, as long as you repay nobody gives a f**k how you applied or how you spent it.

Sadly I suspect that people with so little imagination that they have to ask how to abuse the system will be amongst those that won't repay

 

[Mancunian]

I've just applied with Starling. I'm actually crapping myself as this means so much to me and I'm going to be devastated if I'm not accepted. I've got a plan B but it means giving away a significant part of something I've worked so hard for (like all of us, of course).

I'm anxious and I don't get anxious like this!

Good luck to everybody, let's hope today brings us some good news.

Best of luck that the process with Starling is as speedy and straightforward as it was designed to be.

I would be interested to hear how you get on as I also have a business account with Starling, but have not made an application to them as yet.

 

[cash_is_king]

As I've said before, as long as you repay nobody gives a f**k how you applied or how you spent it.

Sadly I suspect that people with so little imagination that they have to ask how to abuse the system will be amongst those that won't repay

Good point Mark. What little resources they have to police this loan (if any) I suspect will be used on those that default.

 

[pete1992]

Has anyone applied through RBS and been paid out yet? I signed the agreement wednesday morning (very early on) but not had anything come in yet

 

[jimbof]

That sounds like a bit of a minefield considering the rules on taking Dividends. Whilst the grant might be able to be added as income increasing profits the loan I would assume cannot.

I assume the only sensible situation where you might effectively be taking an amount equivalent to the loan in dividends (but not actually taking the loan itself) would be if you were in the habit of usually leaving a fair chunk of profit in the company as working capital; you might choose to replace that working capital in the business with the loan and withdraw the profits as dividend now.

Of course eventually you'll have had all the profit and then will only be able to draw salary without making illegal dividend payments...

 

[Desolate]

By way of an update
One of my businesses has banked with Barclays for years and still cannot apply for the loan online as apparently I need to provide some documents. No idea what these are as I they haven't called me as promised and I can't stand being on hold any more

Another business is with Starling. Applied for the loan at 11am this morning and received that cash around 1.30. Pretty remarkable.

The only downside is that I have another business with Starling and they are only allowing one application overall. So if you have two businesses with them, apply for the one with the biggest requirement first.

Our other, larger, business banks with Metro and they haven't launches yet.

So one nil to the new tech led bank - it really was remarkably easy.

 

[ADW]

By way of an update
One of my businesses has banked with Barclays for years and still cannot apply for the loan online as apparently I need to provide some documents. No idea what these are as I they haven't called me as promised and I can't stand being on hold any more

Another business is with Starling. Applied for the loan at 11am this morning and received that cash around 1.30. Pretty remarkable.

The only downside is that I have another business with Starling and they are only allowing one application overall. So if you have two businesses with them, apply for the one with the biggest requirement first.

Our other, larger, business banks with Metro and they haven't launches yet.

So one nil to the new tech led bank - it really was remarkably easy.

I have same type of issue with Barclays and they have been stringing companies along with different messages for over a week. Another business I have was just over 1 working day to get funds with another bank.

 

[Gordon - Commercial Finance]

Has anyone applied through RBS and been paid out yet? I signed the agreement wednesday morning (very early on) but not had anything come in yet

Yes RBS have paid out on a few that I've heard of.

 

[gpietersz]

You may not use your loan to finance the purchase or hire of fixed assets, other than to replace existing assets with equivalent assets.

The TSB one does not have that. It does seem odd to me. Why not get the loan from someone who does not have this clause?

Sadly I suspect that people with so little imagination that they have to ask how to abuse the system will be amongst those that won't repay

If you have imagination you can probably think of legitimate ways to use it.

 

[JackOfAllTrades]

Has anyone applied as a "Business In Difficulty"? Can't see mention in this thread to date.

I bank with HSBC and going through the application form ticking that box it brings up a box and implies that as long as you're not in certain industries, you'll still get the loan (but I havn't completed it).

The details I see (from googling) is

"For some businesses, who self-declare as being a “business in difficulty” on 31 December 2019, there may be restrictions on the amount of finance they are allowed to borrow and what they can do with the loan.".

We fall foul as "accumulated losses (are) greater than half of their share capital in their last annual accounts"

But we'd put more money, initiated a turnaround plan and were very confident BC (Before Coronavirus). We're a 13 year old company that would quite like to survive and thrive, but would need the BBL to get through the next couple of months.

I wondered what happens next if you do self-declare this? I'm not too sure the banks will be too fussed as they are not liable. Thoughts?

 

[RockNRollaaa]

Wow @Desolate !! Good for you.

I applied a bit before you with Starling and haven't heard anything yet. Ugh.

But if you have been banking with them a while they may have prioritised you and I only joined a week ago.

 

[RockNRollaaa]

@Desolate - can I ask, after applying what communication did you have?

They say you will be messaged through online banking but I can't even find a messaging centre on the app or web banking.

When/where did you receive notification of your approval and have to sign electronically?

Many thanks

 

[gpietersz]

@JackOfAllTrades

Its to do with complying with EU state aid rules so if you have not received state aid before it should be OK:

https://www.british-business-bank.c...nce-back-loans/faqs-for-small-businesses/#f22

 

[cash_is_king]

The TSB one does not have that. It does seem odd to me. Why not get the loan from someone who does not have this clause?

Interesting. I went with Santander because it was easy. At the time I hadn’t really thought about getting this loan, saw it on my online banking log in screen and applied for a laugh to see how easy it was. It was too easy.
So now I’m actually considering signing the agreement and using the cash to invest.

TBH, as mentioned before, provided we’re paying it back on time. No ones really going to say much.

 

[Countin']

I applied with Starling this morning, signed the paperwork at 10pm and the cash arrived 30mins later.

 

[billybob99]

I don't need a loan.

 

[Mancunian]

This is on the Starling Q&A page -

If I have more than one business or entity can I get more than one BBLS loan?
No, the rules of the scheme state that you’re only permitted one BBLS loan per person or group. This includes a sole trader or different companies you own or which are owned by a group.

My understanding was that if the companies are separate entities, then a loan is possible for each? Note that Starling are saying these are the rules of the scheme rather than their own rule.

 

[trax7960]

This is on the Starling Q&A page -

If I have more than one business or entity can I get more than one BBLS loan?
No, the rules of the scheme state that you’re only permitted one BBLS loan per person or group. This includes a sole trader or different companies you own or which are owned by a group.

That’s just not true. Group owned companies have to apply for a single loan at group level, but limited companies are by nature their own entities and are eligible to apply completely separately of eachother surely.

 

[Mancunian]

That’s just not true. Group owned companies have to apply for a single loan at group level, but limited companies are by nature their own entities and are eligible to apply completely separately of eachother surely.

Indeed, that was my understanding.

I do like Starling, but it's worrying when they (and they're not the only bank) seem to get basic rules so wrong.