The government has made three main financial offerings available to you to support your business. Our purpose with this article is to explain the implications of each scheme and which is best suited to your needs. The financial offerings referred to are the Restart Grant Scheme, recently closed Bounce Back Loans and lastly the Recovery Loan Scheme. The consequences of each scheme for your business will be explained in more detail below. Firstly, please see a snapshot comparison.
The increase of APR % correlates with the increased amount of monies loaned. However, an important aspect to consider is who is providing the loans security. The Recovery Loan scheme requires business owners to support the governments contribution to the loan with their own assets. This means that if you are unable to repay it is much easier to pursue business owners personally in debt recovery and this liability must be considered.
Recent legislation from the 1st of December 2020 has placed HMRC as a preferential creditor, requiring for the institution to be paid before other creditors. Therefore, if unable to meet repayment contributions companies will be required to pay HMRC first, ahead of other creditors.
Frost Group brings its awareness of changes in legislation and understanding of liabilities to assist SME’s (Small-Medium Enterprises) facing insolvency. We stand out by giving you the real picture of the economic environment to best serve your needs rather than focusing on filling our pockets. Our support within the Governments next economic recovery policies is no different. Be aware that in taking a loan that HMRC will get their money back first, despite the pressure you may already be facing from your other creditors.
If you are eligible for the restart grant scheme take it. You do not need to repay the money and it bears no interest. This makes it the best option if you only require a small amount of monies to restart your company. If ineligible, be cautious with the recovery loan scheme, though the interest is reasonable coronavirus is still a while away from being fully resolved. Ensure that you ask for what you need and minimise unnecessary risk.
Article written by Joshua Frost
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