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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New study predicts UK property boom

Small and medium sized businesses are set to drive a commercial property boom in the next two years, according to a new study.

Research from by finance specialist Together shows nearly six out of ten SMEs (58 per cent) – nearly 3.4 million across the UK – say a boost in business is driving a need to move or extend their existing site for additional staff and equipment as well as space for storage.

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Among firms with property plans, 30 per cent are looking to move to bigger premises while one in six (16 per cent) aim to extend their existing facilities. Another one in eight (12 per cent) will buy additional buildings or construct them from scratch.

However, some businesses fear their ambitions to expand could be hampered by a shortage of suitable property.

Nearly three out of four SMEs in London (73 per cent) and 71 per cent in the North East are planning to grow their premises over the next two years. SMEs in Wales (64 per cent) and the North West (63 per cent) are also focused on growth.

However, the survey revealed that about 29 per cent of SME bosses say there is a real estate stock shortage in their area, with the South West facing the biggest shortfall.

Around a third (35 per cent) of companies are worried about the costs of moving while 27 per cent are concerned about the potential disruption. Around a fifth (19 per cent) say they are nervous about the process of moving.

Finance is also a concern for business owners, with around 200,000 SMEs saying they are worried about lenders not understanding their business, while nearly 300,000 are concerned about the speed of decision making by banks.

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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

Home Improvement: Is size everything?

Whatever your home improvement project is; whether you’re extending up, down, side or within, size and the use of space is vital to achieving the best design and improvement.

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To get the best home improvement, why not take a drive around your local area to see how other people have done it? Keep an eye out for properties similar in structure to your own and make a note of what to do and don’t want to achieve. Look at houses from your local estate agent, online and property catalogues. Also use your dog walks, jogging and evening walks as research trips.

Most homes are extended at the back, but you can consider extending upward,  downward or sideways depending on planning permission and building regulation. The exterior appearance and size of your property will have an impact on its value and appeal.

Extensions, conservatories, porches, driveway, garages come in all shapes and sizes, from standard to premium design and space. Just make sure it is in keeping with the aesthetic of your home and that you consider the orientation – taking into account its proximity to surrounding trees, outbuildings and neighbouring properties and how much sunlight it will get during the day. For example a north-facing conservatory can suffer from lack of sunlight and bump up your heating bills.

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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

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