Government Bounce Back Loan

James Hempsall, OBE and Director of Hempsall’s, shares his experience of the government Bounce Back Loan:

The idea of a government backed Bounce Back Loan was something to consider in the future. Well, that time is now. And I know that because I have applied for and received one.

First, let me quote the government information:

If your small to medium-sized business (SME) is affected by coronavirus, you may be able to borrow between £2,000 and £50,000 through a Bounce Back Loan scheme [the maximum is 25% of turnover]. The government will guarantee 100% of the loan and for the first 12 months you will not have to pay any fees or interest or make repayments. You may be eligible for this scheme if your business: is based in the UK; has been negatively affected by coronavirus; was not an ‘undertaking in difficulty’ business on 31 December 2019. This includes self-employed people. Apply for a Coronavirus Bounce Back loan.

Why do I think settings should be considering this now? Well, we used it to help with some of the unwelcome ripples in our cashflow. Our work type, quantity and timing is now all out of sync and is completely different to how things were before. We have new clients and sometimes their payment processes can be delayed as they get set up.  What we deliver has changed and how we deliver it too. With all things being unpredictable and with us having to apply best guess principles to all our planning we wanted the assurance this loan would offer. We applied through our bank, on the recommendation of our bank manager. The online process took minutes, it was approved within hours, and the funds were in our account within two working days. So, for us the experience was faultless.

Of course, we will have to pay it back (within six years), and there’s no penalty for early repayment. But we aim that these funds are not for spending, they are to offer us the benefit of financial security. And they are doing the trick.  There may be some additional costs along the line and these funds may help then.

Early years settings are like lots of other businesses and ours. Everything is different, income and expenditure is under pressure, cashflow is more volatile than usual, credit terms becoming unfavourable and breakeven points hard to pin down. We don’t know what will happen next, or for how long the Bounce Back Loan will be available for. I urge any business in the private, voluntary or independent sector eligible for one to consider it and make choices right for your business, before it is too late.