Bounce Back Loans - 3 companies

[tomdickandharry]

Hi I own a few companies all impacted by Covid 19.

My smallest turns over £500k and biggest £5m, all 3 have been impacted by the Covid 19 outbreak.

if company A owns the shares in company b and c, does that stop us applying on all 3? they are seperate entities with own empoyers / payroll etc and income / clients.

Whats your view? thanks for help and guidance in advance. Struggling to get clarity from banks / accountant.

 

[Dave Boatman]

Hi I own a few companies all impacted by Covid 19.

My smallest turns over £500k and biggest £5m, all 3 have been impacted by the Covid 19 outbreak.

if company A owns the shares in company b and c, does that stop us applying on all 3? they are seperate entities with own empoyers / payroll etc and income / clients.

Whats your view? thanks for help and guidance in advance. Struggling to get clarity from banks / accountant.

Bounce back loans are for companies with £200k turnover max in 2019

 

[Mark T Jones]

Bounce back loans are for companies with £200k turnover max in 2019

not the case

 

[Opinion87]

Bounce back loans are for companies with £200k turnover max in 2019

Where did you read that? It's capped at £50k / 25% or turnover, haven't seen anything about a cap on turnover being £200k.

https://www.british-business-bank.c...-interruption-loan-schemes/bounce-back-loans/

 

[anonuk]

Hi I own a few companies all impacted by Covid 19.

My smallest turns over £500k and biggest £5m, all 3 have been impacted by the Covid 19 outbreak.

if company A owns the shares in company b and c, does that stop us applying on all 3? they are seperate entities with own empoyers / payroll etc and income / clients.

Whats your view? thanks for help and guidance in advance. Struggling to get clarity from banks / accountant.

I guess it would come down to whether Company A has 'control' over Companies B and C, or is Company A nothing more than the shareholder?

 

[Talay]

My chap at Barclays says the system is not coping with multiple applications for multiple companies but he was barking on about rules if a group. Mine are not in a group so we'll have the free dosh and trebles all round !

 

[Porky]

@anonuk has hit the head on this one I think, the PSC could be the dominant factor here. If the loans are knocked back it would likely be that reason?

Not exactly sure on each individual banks interpretation of the rules as nothing specific is stated on the British banks term sheet.

If I was me, I would try submitting all three claims separately and see what happens. Probably do A first to get the money in and then do B and C after.

If it comes down to claims only being accepted by the PSC you could look at changing the PSC on B and C to get the loans in.

At the end of the day you have three independent companies employing different staff all under pressure from Covid - it’s right you should have a BBL for each company

 

[stark77]

I posted on the main thread about this, but no comment, so trying here as it seems more relevant.

Santander have published guidance on what constitutes a group [ Link removed as I apparently can't add them yet, but it's on their website and can be found by googling "business group guidance santander" ]

It includes two otherwise independent limited companies controlled by the same person (or group of people) if they are in the "same or adjacent" markets.

In such a case, they advise that only company A -OR- company B can apply for a loan as they are deemed to be in a group. To support this they reference the EU SME Definition Guide pdf.

So far so straightforward, but what isn't clear is whether such a "group" application should use "group" revenue. The SME definition guide seems to pretty clearly indicate that within the context of definitions for state aid, the group revenue would be considered as 100% of revenue from company A + 100% revenue from company B in example D on the Santander PDF.

The HSBC application seems to support this idea by asking to state "group" revenue and then limits loan size to 25% of that amount.

The trouble for me is, I can't work out if I am breaking the rules by making two separate applications - one for each business - or potentially breaking the rules by making a single group application from one or other business. Either way, the total loan size will be way under the £50k threshold, but I don't want a situation in the future where I'm accused of fraud for getting the rules wrong. But I don't know which one is right/wrong - so who do you actually ask??

Presumably the bank don't make determinations of fraudulent applications in this context, but who does? I see HMRC referenced in the other thread, but are they available to ask questions about the scheme? If so, where do I go to get clarification?

 

[anonuk]

I posted on the main thread about this, but no comment, so trying here as it seems more relevant.

Santander have published guidance on what constitutes a group [ Link removed as I apparently can't add them yet, but it's on their website and can be found by googling "business group guidance santander" ]

It includes two otherwise independent limited companies controlled by the same person (or group of people) if they are in the "same or adjacent" markets.

In such a case, they advise that only company A -OR- company B can apply for a loan as they are deemed to be in a group. To support this they reference the EU SME Definition Guide pdf.

So far so straightforward, but what isn't clear is whether such a "group" application should use "group" revenue. The SME definition guide seems to pretty clearly indicate that within the context of definitions for state aid, the group revenue would be considered as 100% of revenue from company A + 100% revenue from company B in example D on the Santander PDF.

The HSBC application seems to support this idea by asking to state "group" revenue and then limits loan size to 25% of that amount.

The trouble for me is, I can't work out if I am breaking the rules by making two separate applications - one for each business - or potentially breaking the rules by making a single group application from one or other business. Either way, the total loan size will be way under the £50k threshold, but I don't want a situation in the future where I'm accused of fraud for getting the rules wrong. But I don't know which one is right/wrong - so who do you actually ask??

Presumably the bank don't make determinations of fraudulent applications in this context, but who does? I see HMRC referenced in the other thread, but are they available to ask questions about the scheme? If so, where do I go to get clarification?

My understanding is that if you are a ‘group of companies’ you base your calculations on the total turnover of the group.

However, this completely defuncts most of the other rules, common sense and the whole purpose of being a Ltd company, because if you apply for the loan under Company A, Company A then becomes liable for the loan amount going to Company B. If Company B collapses, Company A still has to pay the entire loan back.

So far it’s only Santander and Starling that I’ve seen using that definition of a group of companies so I don’t know if it is THE definition but it’s certainly not what companies house view as a group of companies.

With regards to hmrc checking applications, the only place I have seen that mentioned is on the Financial Times website. However, they were incorrect on a few of their assumptions before the loan was announced so I’m not sure if it’s coming from the treasury or just what they think will happen. The general belief I’ve seen around the various forums is that checks will only be triggered if a loan is defaulted on, but not a chance I’d like to take.

What business are your two companies in and hopefully someone can advise whether they would be classed as the same or adjacent markets?

 

[stark77]

Thanks for the considered reply

My understanding is that if you are a ‘group of companies’ you base your calculations on the total turnover of the group.

Yes, that is how I read it as well. Both HSBC and Co-operative and quite specific in their application forms that you use group turnover for the calculations

However, this completely defuncts most of the other rules, common sense and the whole purpose of being a Ltd company, because if you apply for the loan under Company A, Company A then becomes liable for the loan amount going to Company B. If Company B collapses, Company A still has to pay the entire loan back.

This is the bit I'm definitely very unsure of, but I agree it seems to run entirely counter to the purpose of a limited company. My take though is that under the Santander definition, you can't share the loan across the group companies. If you don't have a parent company, then one company can apply for one loan, based on the combined turnover of all companies in the group. If company A takes the loan, then company A is liable for the loan. Company B won't see the money, or the liability. I can't see how else it could possibly work. Even though the end point is a strange place.

So far it’s only Santander and Starling that I’ve seen using that definition of a group of companies so I don’t know if it is THE definition but it’s certainly not what companies house view as a group of companies.

No-one else I can find, including British Business Bank, has provided an alternative definition. They just haven't provided a definition at all. Ultimately, I think getting an answer on that question from HSBC is my only real way forward, if they will give one.

With regards to hmrc checking applications, the only place I have seen that mentioned is on the Financial Times website. However, they were incorrect on a few of their assumptions before the loan was announced so I’m not sure if it’s coming from the treasury or just what they think will happen. The general belief I’ve seen around the various forums is that checks will only be triggered if a loan is defaulted on, but not a chance I’d like to take.

Me neither, hence wanting to get my ducks in a row on what I do. Ultimately though, without an authority to turn to for a definite answer, I suspect I'm going to have to gather what information I can from public sources, document it all and deal with it as honestly as I can based on that information. If that leads to an enquiry then I just make my case at that point.

What business are your two companies in and hopefully someone can advise whether they would be classed as the same or adjacent markets?

I'm pretty sure they would be, as whilst they were set up for different purposes and in a former life, different share ownerships, they have at various times undertaken very similar work. As with all these things though, I'm sure an argument could be attempted either way. My feeling though is that they would be considered the same.

 

[anonuk]

Thanks for the considered reply



Yes, that is how I read it as well. Both HSBC and Co-operative and quite specific in their application forms that you use group turnover for the calculations



This is the bit I'm definitely very unsure of, but I agree it seems to run entirely counter to the purpose of a limited company. My take though is that under the Santander definition, you can't share the loan across the group companies. If you don't have a parent company, then one company can apply for one loan, based on the combined turnover of all companies in the group. If company A takes the loan, then company A is liable for the loan. Company B won't see the money, or the liability. I can't see how else it could possibly work. Even though the end point is a strange place.



No-one else I can find, including British Business Bank, has provided an alternative definition. They just haven't provided a definition at all. Ultimately, I think getting an answer on that question from HSBC is my only real way forward, if they will give one.



Me neither, hence wanting to get my ducks in a row on what I do. Ultimately though, without an authority to turn to for a definite answer, I suspect I'm going to have to gather what information I can from public sources, document it all and deal with it as honestly as I can based on that information. If that leads to an enquiry then I just make my case at that point.



I'm pretty sure they would be, as whilst they were set up for different purposes and in a former life, different share ownerships, they have at various times undertaken very similar work. As with all these things though, I'm sure an argument could be attempted either way. My feeling though is that they would be considered the same.

I think your plan to document all the information you can find, and apply on that basis is probably the safest bet. Getting ANY information out of HSBC at the moment is likely not going to happen any time soon given the complete mess they are in.

As long as you can justify what you are applying for, I don't think you'll have any issues.

 

[stark77]

I think your plan to document all the information you can find, and apply on that basis is probably the safest bet. Getting ANY information out of HSBC at the moment is likely not going to happen any time soon given the complete mess they are in.

As long as you can justify what you are applying for, I don't think you'll have any issues.

Thanks. I'll give it a go with HSBC, if for no other reason to be able to demonstrate that I tried!

 

[MBE2017]

https://twitter.com/sirbasilbrush/status/1262795529349718017?s=21

Very emotional.