According to the Treasury, the bounce-back loans scheme has made more than £38 billion available to 1.3 million small businesses.
However, there are reports that some funding requests are being refused without explanation.
City A.M. reported recently that just five of the 28 accredited lenders are currently accepting applications from new customers. HSBC announced it was closing applications for new customers, as it needed to deal with loans already in the pipeline.
Even though Chancellor Rishi Sunak has extended the deadline for applications to November 30, 2020, what are the alternative options for bounce-back loans?
“Personal credit history or affordability are not meant to be barriers to bounce-back loans, but this has not been the experience of some applicants who cannot bypass automated application systems”
Linda Eziquiel, RandDTax
“Banks are naturally attempting to clamp down on potentially fraudulent applications, but this may also be denying genuine applications.”
Is There Another Way to Get Funding?
“There are ways to grow your business without dipping into precious working capital, or borrowing money,” explains Linda.
Many people are not aware of a scheme which allows innovative businesses in all sectors to recover cash spent on developing products or production and management processes.
“Qualifying businesses can claim R&D Tax Relief or, if loss making, R&D Tax Credit cash payments every year.”
“The UK government R&D incentives can return up to 33% of relevant development costs – such as a portion of staff salaries or costs from hiring sub contractors – back to the business,” continues Linda.
“There are manufacturers and machine shops who are not claiming back a significant proportion of their costs, when they could be”Linda Eziquiel, RandDTax
“Manufacturers are often doing all sorts of innovative things to make and improve products, with new components, using different materials, making jigs and fixtures,” describes Linda.
“Not to mention introducing increasing automation and technology into manufacturing and management systems.”
The Value of R&D
“R&D Tax Relief and R&D Tax Credit is open to any company in any sector which has made new, or improved existing products, or has developed manufacturing and operational processes – where the solution is not readily available or easily deduced by technical staff,” explains Linda.
Because the money received from a claim is classified as post tax shareholder funds, it can be used for anything, not just development activities.
Any claim must be made within two years of the end of the relevant accounting year, in which the company spent money on qualifying activities. If the deadline is missed, then the money will be lost.
To discover if your business can claim, arrange a FREE assessment with RandDTax by:
About the Bounce-back Loans
The loans, which are 100 per cent Government guaranteed, were created to try to help small firms through the Covid-19 crisis.
Businesses can apply for up to £50,000 and have 10 years to repay the money. The bounce-back loans were introduced partly because the Business Interruption Loan Scheme (CBILS) was deemed too slow and complex to apply for.
CBILS can provide loans of up to £5 million, with repayment terms of up to six years, but the Government guarantee is only partial.
A business can’t get both but, a business with a CBILS facility can apply for a bounce-back loan if that will refinance its CBILS facility in full.