These fifty grand loans
Discussion
classicaholic said:
One of my customers took it and paid for a machine we built for them, they were quoted 10% by the leasing company but had this for 2.5% - no brainer really if you needed to borrow.
We were the other extreme. Rang about a van, said we usually buy outright, but had the BBL if needed. Finance company said they were having to be incredibly competitive with everyone having 2.5% on tap. We bought a van at 1% flat. The other thing to remember is that the loans were given in 2020.
A lot were spent on rebuilding businesses after lockdown1, with no realisation that another even longer one would be around the corner in 2021.
I think the second lockdown would have crushed a fair few businesses that had done this.
A lot were spent on rebuilding businesses after lockdown1, with no realisation that another even longer one would be around the corner in 2021.
I think the second lockdown would have crushed a fair few businesses that had done this.
JCKST1 said:
Like I said, I am not saying everyone was taking the p*ss with them but everyone I talk to knows at least one person who has done something they shouldn't have with it.
I know of a few people, mainly contractor type guys/company set up's who took the money, for all I know they maybe paying it back as normal or not but one spent his £20k towards an Audi R8 and two others now have nice Rolex's.
The primary purpose of the loans was to keep money flowing through the economy. Economic health is determined not by the size of the economy but by how much flows through it. In the examples you give, the Audi and Rolex dealers made a nice sale where they may not have done otherwise. In turn, the profit they made from those sales was used to buy other things... and repeat. Whilst not in the spirit of which the loans were intended, providing the loan is paid back then its purpose has been served. I know of a few people, mainly contractor type guys/company set up's who took the money, for all I know they maybe paying it back as normal or not but one spent his £20k towards an Audi R8 and two others now have nice Rolex's.
StevieBee said:
The primary purpose of the loans was to keep money flowing through the economy. Economic health is determined not by the size of the economy but by how much flows through it. In the examples you give, the Audi and Rolex dealers made a nice sale where they may not have done otherwise. In turn, the profit they made from those sales was used to buy other things... and repeat. Whilst not in the spirit of which the loans were intended, providing the loan is paid back then its purpose has been served.
No it wasn’t, it was to help companies to stay afloat and to avoid unemployment through redundancy, along with other measures like furlough, 5% VAT etc. The idea that money spent on Audis and Rolexes does the economy any good is ridiculous.wormus said:
No it wasn’t, it was to help companies to stay afloat and to avoid unemployment through redundancy, along with other measures like furlough, 5% VAT etc. The idea that money spent on Audis and Rolexes does the economy any good is ridiculous.
It's not completely ridiculous. He's right that money flow is critical - if that stops, employment stops. Audis and Rolexes are pretty egregious examples, but producing, shipping, selling, repairing and servicing them keeps a lot of people in gainful employ.wormus said:
StevieBee said:
The primary purpose of the loans was to keep money flowing through the economy. Economic health is determined not by the size of the economy but by how much flows through it. In the examples you give, the Audi and Rolex dealers made a nice sale where they may not have done otherwise. In turn, the profit they made from those sales was used to buy other things... and repeat. Whilst not in the spirit of which the loans were intended, providing the loan is paid back then its purpose has been served.
No it wasn’t, it was to help companies to stay afloat and to avoid unemployment through redundancy, along with other measures like furlough, 5% VAT etc. The idea that money spent on Audis and Rolexes does the economy any good is ridiculous.That didn't mean you couldn't draw money out of the business. It meant you couldn't draw money out of the business in new amounts because of the loan.
So, if you were already paying yourself, say, £5k / month (figure plucked from the air), and you'd stopped paying yourself that due to Covid, you'd be allowed to start paying yourself again once you had your loan.
Or let's say you'd got £50k of your own money in the business as a working capital buffer; you'd be allowed to take that £50k out and replace it with the BBL (so long as doing-so didn't of itself drive the business over the edge).
So it would be quite reasonable to use the £50k as a cheap (2.5%) working capital loan, allowing you to take your own money back out of the business, and then spend that on an Audi or a Rolex, if that's what you wanted.
Paying staff (including yourself, if your business) is still a "business use."
What you couldn't do was take a business that couldn't pay you pre-Covid, get a £50k loan, and pull that £50k out personally. Because that would be using the £50k for personal use.
The problem with this discussion is some people are trying to be too binary about the whole thing, when in reality the individual circumstances make a big difference as to what was / was not allowed. And what people *say* they're doing ("I spent my BBL on a car") and what they're *actually* doing ("the BBL allowed my accountant to legitimately repay my working capital loan to the business, which allowed me to buy a car") are often not the same at all.
The cases I've seen of people being prosecuted seem to fall firmly in the "my business wasn't profitable / wasn't trading; I took a BBL and used it to pay myself money that I was never entitled to" category, which is and always was not allowed.
The point of the public policy was to stop the economy from grinding to a halt - because once stopped, it doesn't re-start. The enormous (400k?) number of SMEs that have vanished without being replaced during / after Covid give us a sense of quite how much worse it would have been without this intervention.
The severity of the prosecutions does vary considerably:
https://www.gov.uk/government/news/bounce-back-loa...
This is not a slap on the wrist, but the reported (and I know there can be more under the skin) facts are no worse than many of the other cases where the only punishment seems a simple disqual. I only wish the penalties were harsher in more cases.
https://www.gov.uk/government/news/bounce-back-loa...
This is not a slap on the wrist, but the reported (and I know there can be more under the skin) facts are no worse than many of the other cases where the only punishment seems a simple disqual. I only wish the penalties were harsher in more cases.
JiggyJaggy said:
So just wondering what happens when businesses if they genuinely become insolvent etc?
I know that if they have Government backed loans the insolvency practitioner has to report to the Government on how the finance was spent. I assume it's then up to the Government what action to take if it was misused.Rufus Stone said:
JiggyJaggy said:
So just wondering what happens when businesses if they genuinely become insolvent etc?
I know that if they have Government backed loans the insolvency practitioner has to report to the Government on how the finance was spent. I assume it's then up to the Government what action to take if it was misused.What is interesting is that HMG are getting funds back… the letter must be quite frightening!
Deesee said:
What is interesting is that HMG are getting funds back… the letter must be quite frightening!
The company of which I was a Director succumbed to Covid with £30k of the £50k outstanding (ironically, what did for the company was the abandoning of two public sector projects that had previously been put on hold and HMRC clawing back a sizeable R&D tax credit that they erroneously awarded us two year priors all of which was not known to us at the point of application.... so a case of the government shooting themselves in the foot. Either way its demise was entirely genuine and unwelcome).Around a week after the administrator had been appointed, we received a letter from the bank that beggared belief. It was one rung away from saying "pay up toe-rag or we'll do your knee caps". It was by far, the most unprofessional correspondence I think I've ever seen and smacked of panic on behalf of the bank. I've got a copy somewhere and will scan and share if I can find it.
StevieBee said:
Around a week after the administrator had been appointed, we received a letter from the bank that beggared belief. It was one rung away from saying "pay up toe-rag or we'll do your knee caps". It was by far, the most unprofessional correspondence I think I've ever seen and smacked of panic on behalf of the bank. I've got a copy somewhere and will scan and share if I can find it.
Incredible! please do!skwdenyer said:
JiggyJaggy said:
And what was the outcome in terms of you paying or not paying that?
Why would he pay? The ltd company was the borrower.Our only creditor at the time was the bank for the remainder of the BBL. They didn't dispute anything and that was the end of that. The only outcome is that an otherwise solid company that I spent 20 odd years building folded as a result of the very institution that lent us the money asking for other money they gave us two years earlier, back, and abandoning projects that we had secured that would have enabled us to repay the loan in full.
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