Bounce Back Loan Deadline
The Bounce Back Loan Deadline is Wednesday 31st March! For businesses that are still considering taking a Bounce Back Loan time is running out. The deadline for applications is the 31 March 2021.
For businesses that took out loans last year consideration should now be given to repayment. Under the terms of the loan, repayment must commence twelve-months from the date of taking the loan.
If appropriate payment can be made in full resulting in no interest charged. If the business has other
business credit cards
Then it would be wise to consider paying off or reducing these debts as the interest charged is likely to be much higher than the 2.5% charged on the bounce Back Loan.
Bounce Back Loan Payback
Remember, if you use the Bounce Back Loan to repay other borrowings, they must be the same business debts and not personal. As this would be against the rules of the scheme. Furthermore this could involve prosecution or a tax liability or both.
As always, if you are not sure, get advice from a properly qualified and experienced accountant.
Bounce Back Loan 5 year Repayment
Should the business decide to take the 5 year repayment route, the bank will start deducting repayments monthly from the business current account with interest charged at 2.5% per year.
Should the business be in a position to pay a lump sum off the loan this will have the affect of reducing the monthly instalments and the interest charge.
Business Struggling with Repayment
If the business is going to struggle to meet the monthly instalment, they can apply to their bank to take advantage of the Governments Pay as You Grow options. An application may be made to the bank to pay interest only for the first six months.
This will overall increase the amount to repay as the repayment period will be extended. This option can be made available three times during the duration of the loan.
Another alternative available under the Pay as You Grow scheme is to extend the term to ten years. This would again reduce monthly repayments to assist cash-flow but would mean extra 4 year interest payments.
If you need advice please do feel free to contact us at abm accountant. Mike Brooks AIA mike @abmaccountant.co.ukFollow us on Social Media