UK Covid-19: How to apply for government business loan

The government has released more details about the £350bn package of financial support which Chancellor Rishi Sunak has promised to UK business to deal with the effects of the coronavirus pandemic.

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Last week he set out plans to pay employees 80% of their salaries, capped at £2,500 per month, in an attempt to protect jobs.

Two further schemes to help business were announced on Tuesday: a new interest-free Business Interruption Loan Scheme for small and medium-sized firms and a Bank of England finance option for bigger businesses.

How will the Business Interruption Loan Scheme work?

UK-based small and medium-sized businesses (SMEs) with an annual turnover of less than £45m can apply for an interest-free loan of up to £5m to help them through Covid-19 related difficulties.

The government will provide a grant payment to cover the interest and initial fees for the first 12 months, and will guarantee 80% of the loan amount to give banks and financial companies the confidence to lend.

Under the scheme, which will initially run for six months, businesses will be able to borrow for up to six years. They will be liable to repay the money in full – the guarantee is for the lenders, not the borrowers.

Will all small and medium-sized firms be able to borrow money?

Not necessarily, Firms will have to prove that they are viable businesses which have been trading successfully, but just need extra support to deal with short term difficulties caused by the current disruption. Some firms may not be successful.

The money will be provided by more than 40 lenders who have signed up to the scheme, including High Street banks like Barclays, HSBC, Lloyds and NatWest, as well as more specialist finance companies.

Businesses are asked to contact their own bank first (if they are taking part in the scheme) via the company website if possible, and only approach other lenders if they need to.

The British Business Bank, which is running the scheme, told the BBC on 23 March that it expected money to start flowing “this week”.

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You can read more about how the scheme will work here.

Can self-employed people apply to the Business Interruption Loan Scheme?

Yes, The British Business Bank says self-employed people with an annual turnover of up to £45m can apply under the scheme, as long as they operate through a business bank account, and generate more than 50% of their turnover from trading activity.

This includes sole traders, freelancers, and limited partnerships, operating in all sectors.

The government has already said the UK’s five million self-employed people would be allowed to defer self-assessment tax payments, and would benefit from mortgage payment holidays as well as an expansion of welfare support, including universal credit and Local Housing Allowance.

HM Treasury told the BBC the government was “working hard on further measures to support the self-employed”.

What about help for bigger businesses?

Companies that have a yearly turnover of more than £45m may be able to take advantage of the Bank of England’s new Covid Corporate Financing Facility.

The Corporate Financing Facility is effectively a government promise to buy short-term IOUs from companies which are in sound financial health and have a very high credit rating, but which need help to boost their cash flows.

The IOUs can be for any period between one week and 12 months.

The Bank of England says that eligible companies must have a “genuine business” in the UK, and “make a material contribution to the UK economy”.

Generally they will be based in the UK, or have their headquarters here, and employ or provide services to a significant number of people in the country.

How do big companies apply?

Companies must apply through their own bank in the first instance, assuming it is taking part in the scheme, and need to request funding of at least £1m.

The facility will offer finance to companies on similar terms to those available in the markets in the period before the pandemic.

The government will not publish details of which firms have taken advantage of the scheme, which is due to run for at least 12 months.

Source: BBC News

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Finance Management: Knowledge is power

People are living in credibly hectic lifestyles and this lack of spare time means many put off reviewing their finances. Keeping on top of your money matters should be a priority and doesn’t necessarily have to be a labourious, time consuming task.

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The reality is that circumstances change – prices fluctuate, our personal situation change, such as jobs and family affairs. So being equipped with knowledge about the health of your finance is a necessity, so you can react should circumstances in your life change.

Top financial priority

  • Paying down debt – mortgage, credit, loans etc
  • Building savings – financial savings, energy savings, etc
  • Paying bills – rent, energy, utility, tax, etc
  • Essential living expenses – food, clothes, health care, etc
  • Lifestyle expenses – holiday, entertainment, hobby, etc
  • Investment – cash, securities (equities, bonds and derivatives), commodity, etc
  • Retirement – pension, personal plan, annuity, etc

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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

 

UK Finance survey shows UK mortgage approvals hit 6 month low

The number of new mortgages approved by British banks hit a six-month low in September, according to a survey that adds to signs the housing market is slowing again ahead of the October Brexit deadline.

 

Industry body UK Finance said banks approved 42,310 loans for home purchase in September, compared with 42,527 in August, according to seasonally-adjusted data. However, the number of approvals for remortgaging rose to the highest level since November 2017 at 32,649.

UK Finance said annual growth in consumer credit rose to a 19-month high of 4.5%, driven by personal loans and overdrafts rather than credit card lending.

Source: Reuters

The A to Z of Mortgage in UK

Things you must know before getting a mortgage in the UK. Explained in alphabetical order are some key words and phrases you should be aware of before taking out a mortgage loan to buy a property in the UK.

Mortgage

  • Agreement in principle –  A certificate or document that some lenders give you, showing the amount they will probably be willing to lend you. This isn’t a guarantee, but can be helpful when dealing with estate agents.
  • APR (Annual Percentage Rate) –  This shows the overall cost of a loan, taking into account the term, interest rate and other costs.
  • Bank or Base rate –  The rate at which the Bank of England lends to other financial institution.
  • Buy to let mortgage –  A loan you take out to buy a property that you intend to rent to tenants.
  • Capital – The amount you borrow to help buy your home.
  • Capped mortgage –  A mortgage with a maximum limit on the interest rate you’ll pay during the deal period.
  • Cashback mortgage –  A mortgage that comes with a cash sum which often is a percentage of the amount you’re borrowing.
  • Collared mortgage –  A mortgage with a minimum interest rate you’ll pay during the deal period.
  • Conveyance –  The transfer of rights and legal ownership of property which is carried out by a conveyance solicitor.
  • Credit Score –  A credit score is a tool used by lenders to help determine whether you qualify for a particular credit card, loan, mortgage or service.. Using the information on your credit report and any additional information you supplied as part of your application, lenders use a mathematical model to calculate a numerical score that represents your credit history.
  • Deposit –  The amount of money you put into buying a home which is not included in the mortgage money you’re borrowing.
  • Discounted mortgage –  This has a lower variable rate of interest for a set period, after this the rate increases.
  • Early repayment charge –  A charge you may have to pay if you pay back a mortgage early which includes if you move to another lender.
  • Energy Performance Certificate –  The government legally requires sellers and renters of all homes in England, Wales and Scotland to provide this. It gives a rating of how efficiently the property uses energy.
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  • Fixed rate –  An interest rate that is fixed, in order words it doesn’t move up or down for a set time.
  • FCA Register – This is a Financial Services Register  which is a public record that shows details of firms, individuals and other bodies that are, or have been, regulated by the Prudential Regulation Authority (PRA) and/or the Financial Conduct Authority (FCA). You can check online to see whether a firm is on the FCA Register @ register.fca.org.uk
  • Freehold –  A property in fee simple absolute in possession with no limits on ownership
  • Home Reports (Scotland) –  The Scottish government requires sellers of most properties in Scotland to provide this pack. It must contain a single survey, an energy report and a completed property questionnaire for the property for sale.
  • Income multiples –  The number by which a lender multiplies your earnings to find out how much you can borrow.
  • Individual Voluntary Arrangement (IVR) –  A formal agreement between a debtor and their creditors to make reduced payments towards their total debt over an agreed period, typically five years, after which the debt is deemed to be settled.
  • Interest – The charge that lenders make when you borrow their money.
  • Interest-only mortgage –  A mortgage in which you pay only the interest charges of the loan each month. You are not reducing the loan amount (the capital), and you must repay this in some other way.
  • Interest rate –  The figure that determines how much interest you pay. Usually linked to the Bank of England’s rates and move up or down.
  • ‘Key Facts’ Documents –  Standard documents that all regulated lenders and advisers must give you. They explain their services and detail the mortgage you’re interested in.
  • Leasehold –  A property for a term of years absolute (ownership) which has a limited duration that must be fixed and certain.
  • Loan-to-value (LTV) – The amount of money you want to borrow compared (as a percentage) to the value of the property.
  • Mortgage –  A loan secured on your property.

mortgage-imagery-homes-made-from-twenty-pound-notes

  • Mortgage Adviser or broker –  A mortgage adviser or broker helps you get a mortgage from their available range. They may recommend a mortgage or give you information to help you choose.
  • Prime lending – Lending to borrowers who meet the lender’s standard criteria and present a normal risk.
  • Remortgaging –  Changing your mortgage from a different one, without moving home.
  • Repayment mortgage –  A mortgage in which you pay off both the loan (capital) and interest at the same time.
  • Secured –  If you do not repay your loan, the lender can sell your home to get its money back.
  • Stamp duty land tax –  A government tax that home buyers must pay on properties above a set amount.
  • Standard variable rate mortgage –  The lender’s normal interest rate, ie without any discounts or deals.
  • Sub-prime lending –  Lending to borrowers who represent a higher risk than normal.
  • Survey –  A report on the condition of the property you are planning to buy.
  • Tracker mortgage –  A mortgage with an interest rate linked to a particular base rate and moves up and down with it.
  • Tenure –  Denotes the way in which title to a property is held; it is taken from the French tenir, meaning ‘to hold’.
  • Term – The length of your mortgage, normally expressed in years.
  • Valuation –  A brief inspection of the home you hope to buy, so the lender can ensure it is suitable security for the mortgage.
  • Vendor –  The seller of the property.

For property investment in the UK from start to finish, Please Contact me

Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk