These fifty grand loans
Discussion
fesuvious said:
PSC?
Personal Service Company - typically a one-person Ltd company...A lot of IT contractors do (or did until IR35 came blundering along) used PSC's as a vehicle to contract their services to customers. Pay small salary and take large dividends - more tax efficient.
I know, i was one until the beginning of this month.
Still - this loan offer does sound intriguing
Powerfully Built PSC Director - Outside IR35 said:
quinny100 said:
Other than moral compass, is there anything to stop a director of a PSC obtaining a £50k loan, paying themselves a salary of £6250 a month PAYE for the rest of the year, and winding up the PSC early next year - having registered another PSC for their future work?
Interesting...very interesting...Countdown said:
Powerfully Built PSC Director - Outside IR35 said:
quinny100 said:
Other than moral compass, is there anything to stop a director of a PSC obtaining a £50k loan, paying themselves a salary of £6250 a month PAYE for the rest of the year, and winding up the PSC early next year - having registered another PSC for their future work?
Interesting...very interesting...JPJPJP said:
Powerfully Built PSC Director - Outside IR35 said:
Interesting...very interesting...
AIUI to obtain a £50k loan would need the PSC to have been doing £200k turnover and not be an undertaking in difficulty on 31 Dec 2019Countdown said:
Powerfully Built PSC Director - Outside IR35 said:
quinny100 said:
Other than moral compass, is there anything to stop a director of a PSC obtaining a £50k loan, paying themselves a salary of £6250 a month PAYE for the rest of the year, and winding up the PSC early next year - having registered another PSC for their future work?
Interesting...very interesting...Based on 25% of my last year's turnover, that would see me getting well north of 25k but somewhat south of 35k...potentially of course.
jammy-git said:
JPJPJP said:
Powerfully Built PSC Director - Outside IR35 said:
Interesting...very interesting...
AIUI to obtain a £50k loan would need the PSC to have been doing £200k turnover and not be an undertaking in difficulty on 31 Dec 2019fesuvious said:
It's smelling a lot like subsidies to lenders.
Yes, I know it will be a lifeline for many, but once again banks&lenders are being gifted revenue/profits
This is giving business a short term bailout, but banking a long-term bailout.
Yes, it's fantastic for banks. The share prices of banks are booming. Lloyd's shares, for example, were 67p in January and are now.....34p. Oh, hold on.......Yes, I know it will be a lifeline for many, but once again banks&lenders are being gifted revenue/profits
This is giving business a short term bailout, but banking a long-term bailout.
I'm pretty sure Lloyd's would be happy not to be a part of the whole CIBIL loan programme. Perhaps that would make you happier ?
Edited by OddCat on Wednesday 29th April 17:27
loafer123 said:
Countdown said:
Powerfully Built PSC Director - Outside IR35 said:
quinny100 said:
Other than moral compass, is there anything to stop a director of a PSC obtaining a £50k loan, paying themselves a salary of £6250 a month PAYE for the rest of the year, and winding up the PSC early next year - having registered another PSC for their future work?
Interesting...very interesting...If it were dividends, and they were paid from a loan, I would think this would apply:-
https://www.begbies-traynorgroup.com/articles/dire...
However, paid as a salary, how does that work? Aside from the clearly fraudulent approach of a predetermined plan to go into voluntary liquidation, take the same outcome but in genuine circumstances; a business takes the loan, pays salaries to genuine staff but cannot "bounce back" and folds 12 months down the line. There are no PG's, the government is underwriting the loan etc etc.
Intrigued as to how this behavior can be outlawed.
jammy-git said:
I've heard the £50k cap is either 25% of turnover, or 2x PAYE salaries, whichever is greater.
Can I ask where you have heard this? All I can see so far is that the criteria are: 1) Biz is UK based
2) Biz has been negatively affected by C-19
3) Biz was not an "undertaking in difficulty" on 31 Dec 19
This should get you passed the "can you have a loan" bit.
But the "how much" bit has precious little information available
https://www.gov.uk/guidance/apply-for-a-coronaviru...
Either way, it will help our situation massively, especially since Barclays basically said no to us for a CBILS
gizlaroc said:
But you can not use them to pay off existing debt. How they would know is beyond me, but in your financial plan you can put down you are paying off say a £70k loan at 7% and using the rest.
Where does it say you can’t pay off other debt? And how would they even know or stop it. I intend to do this as it’ll massively improve my cash flow and help me not to run out of money and go bust losing people jobs and negatively affecting my suppliers.
Which is what I though the whole idea of the loans were, to help businesses bounce back and not go bust.
I’m applying Monday either way.
Wing Commander said:
jammy-git said:
I've heard the £50k cap is either 25% of turnover, or 2x PAYE salaries, whichever is greater.
Can I ask where you have heard this? All I can see so far is that the criteria are: Or...it came from the Chancellor's statement.
fesuvious said:
Your response infers I have a chip and a problem. I don't.
For one I bank, in full with Lloyds. Business and personal. I also have shares in Lloyds. The share price has dropped due to a nasty outlook for UK economics.
If I choose to apply for CBILS or this fifty it'll be through Lloyds.
Doesn't change the point I'm making. The winners here are banks.
You mean winners as in 'their profits will be absolutely terrible if they are part of the scheme and even worse if they aren't ?'For one I bank, in full with Lloyds. Business and personal. I also have shares in Lloyds. The share price has dropped due to a nasty outlook for UK economics.
If I choose to apply for CBILS or this fifty it'll be through Lloyds.
Doesn't change the point I'm making. The winners here are banks.
Shares in Lloyd's are pretty much priced for failure. The market cap is less than half the balance sheet net asset value and, at just over £20bn, is only a little over the £19bn Lloyds paid out in PPI claims ! (at least half of which were probably paid out to claimants with dubious claims but the bank rolled over to HMG pressure and just paid out).
HMG also made a tidy profit on the Lloyds shares they owned for a while. Which was mainly as a result of taking an equity stake after Lloyds was effectively arm twisted into taking on the shocking liabilities of HBOS. Before that Lloyd's had been well capitalised and a cautious bank that wouldn't have needed any sort of bailout.
Shareholders in Lloyd's have had a miserable 12 years. 90+% share value erosion and almost no dividends. These people who whinge on about "we bailed out the banks" - well it certainly wasn't for the benefit of the owners of those banks !
Finger in air, but even if the govt are underwriting the risk - so no credit risk; the associated resource costs for the banks to lend are a minimum 140bps. That's made up of liquidity and leverage ratio costs. That also assumes some form of bank levy netting. If they can package them off book, that comes down a bit (45bps assuming 3% leverage ratio).
Banking is far from a free resource that many think it is, I had oversight of the numbers from our retail bank (pre separation back in the day), and taking deposits cost 14bps in operational cost alone. Administration of a loan book, would cost a bit more.
At 2-2.5% p.a. the banks wouldn't be creaming it, but should be making a fair turn.
Banking is far from a free resource that many think it is, I had oversight of the numbers from our retail bank (pre separation back in the day), and taking deposits cost 14bps in operational cost alone. Administration of a loan book, would cost a bit more.
At 2-2.5% p.a. the banks wouldn't be creaming it, but should be making a fair turn.
OddCat said:
fesuvious said:
Your response infers I have a chip and a problem. I don't.
For one I bank, in full with Lloyds. Business and personal. I also have shares in Lloyds. The share price has dropped due to a nasty outlook for UK economics.
If I choose to apply for CBILS or this fifty it'll be through Lloyds.
Doesn't change the point I'm making. The winners here are banks.
You mean winners as in 'their profits will be absolutely terrible if they are part of the scheme and even worse if they aren't ?'For one I bank, in full with Lloyds. Business and personal. I also have shares in Lloyds. The share price has dropped due to a nasty outlook for UK economics.
If I choose to apply for CBILS or this fifty it'll be through Lloyds.
Doesn't change the point I'm making. The winners here are banks.
Shares in Lloyd's are pretty much priced for failure. The market cap is less than half the balance sheet net asset value and, at just over £20bn, is only a little over the £19bn Lloyds paid out in PPI claims ! (at least half of which were probably paid out to claimants with dubious claims but the bank rolled over to HMG pressure and just paid out).
HMG also made a tidy profit on the Lloyds shares they owned for a while. Which was mainly as a result of taking an equity stake after Lloyds was effectively arm twisted into taking on the shocking liabilities of HBOS. Before that Lloyd's had been well capitalised and a cautious bank that wouldn't have needed any sort of bailout.
Shareholders in Lloyd's have had a miserable 12 years. 90+% share value erosion and almost no dividends. These people who whinge on about "we bailed out the banks" - well it certainly wasn't for the benefit of the owners of those banks !
I dont know the details of how succesful or otherwise your investment in Lloyds is.
The issue with banks, and for me, specifically, Lloyds, is that they have zero morals. One had hoped that might change, but it appears not.
The insistence on Personal Guarantees for 100% of a loan that was already 80% guaranteed by the government was a classic example. Just out to hoover up the assests that fall out of the inevitable failures of some businesses. And doubtless claim the 80% as well so making twice. Yes, they were beaten into submission on that, but why should that be necessary?
jammy-git said:
Lloyds was a cautious bank!
It was. To the point where, in 2005/6, the directors were under pressure from institutional investors to take more risks like the amazing Fred (the shred) Goodwin was doing at RBS. All the st was in the HBOS lending book that Lloyd's stupidly took over just as the st hit the fan. Were it not for that then Lloyd's, like Barclays, wouldn't have needed HMG intervention.
I dont know who the people 'bank bashing' think is doing well out if the banks ?
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