“The encouragement to work from home has killed the office and is preparing to blockade during the winter, so there is little trade for six months. It’s worse than ever,” said the owner of the office broker business. One Jonathan Ratcliff says.
Ratcliff, which operates Leeds-based Offices.co.uk, will procure and negotiate corporate office space. However, the coronavirus pandemic has led to a slump in demand for office space, as authorities have surged telecommuting to contain the virus’s epidemic. Ratcliffe, 40, is one of the 1.3 million business owners who used bounce back loans to survive the crisis.
The government-sponsored loan scheme, launched six months ago, offers small businesses up to £ 50,000 in loans. The loan is managed and paid by a major UK bank and the government pays all interest and fees for the first year. After 12 months, the interest rate on the borrower will be set at 2.5% per year.
I’m a money newsletter: Savings and investment advice
Ratcliffe, who employs two other staff, applied for a £ 28,500 loan as soon as the plan began on May 4. This was the maximum amount he could borrow, as the loan cap was 25% of business sales and his company’s sales last year were around £ 114,000.
“Initially, I took out a loan to hedge the future. I invested about half in strengthening marketing and redesigning the website. But the second half of the loan will give me cash flow over the next six months. It looks like it’s needed to cover it, “says Ratcliffe. “That said, I want to repay the loan before interest is charged.”
Ratcliffe, who has about 1,000 buildings in his book, says companies that rented flexible office space almost decided to give up their lease. Business began to recover again in early September, but the recent surge in Covid-19 cases has reduced inquiries.
“We have some interest in leasing starting in March or April,” says Ratcliffe. “In fact, we made some good deals locally. People want to work from home and areas like Reading, Oxford and Leeds are on track. Demand plummeted. Is in the center of London. “
The bounce back loan scheme, which has paid £ 40.2 billion to date, has received widespread positive reviews since its inception. Many successful applicants say the process is simple and has been credited to their account within 24 hours.
Applicants must enter information such as company details, address, sales, and the amount they would like to borrow when applying through a bank. The application deadline has been extended from the original November 4th deadline to the end of January 2021 to allow companies that have already received funds to replenish their existing loans if additional cash is required. To qualify, the company must be based in the United Kingdom, established before March 1, 2020, and be adversely affected by the coronavirus.
Meanwhile, Prime Minister Rishi Sunak recently announced that companies will be given more time to repay their loans and that the maximum repayment period will be increased from 6 to 10 years. The Coronavirus Business Suspension Loan Scheme exists for large companies that want to borrow over £ 50,000.
Sidonie Warren, who runs the stationery Papersmiths, has borrowed £ 50,000 in full. All five of her five stores, based in Brighton, Bristol and London, had to be closed for more than two months during the blockade. Since the pandemic, the two have remained closed and 15 staff have been released.
“The bounce back loan was great, but it was a quarter of what we needed. We had limited payment options to our closed suppliers. Fortunately, some stores are based in rural areas. Eligible to receive a £ 25,000 cash grant from the municipality. Significant growth has been seen through the online business, with sales up 1,000% compared to this time a year ago. “
Applicants who failed
However, not all companies have bounce back loans. According to the latest Treasury statistics, about 1.66 million cases have been applied and about 300,000 have failed. The Financial Ombudsman Service handles about 650 complaints related to Covid-related loans, most of which are related to bounce-back loans.
Companies that do not have a bank with any of the 28 certified lenders are struggling to take over as new customers, according to members of the All-Party Parliamentary Group on Fair Business Banking. Many banks have prioritized existing customers, and lenders such as HSBC and Santander have closed their applications for new customers.
Other business owners say it took weeks for the money to arrive, even though they promised to be credited to their account within a few days.
79-year-old Alampashi, who runs switchgear and cable accessories for the electricity procurement business, applied for a £ 25,000 bounce back loan through HSBC on May 4. He says it took two weeks for the money to arrive and he had a hard time contacting someone via HSBC’s web chat or phone line.
“I mainly procure and send appliances to clients in the Middle East. But when the pandemic took hold, it had a huge impact on air and transportation. There was a lot of stock that couldn’t be sent to customers. Faced with.
“The loan application was terribly frustrating. I’ve been in business for 13 years and have never been withdrawn. Fortunately, the business has recovered again, but money is there when needed. It’s useful to know that the loan will provide relief at tricky moments and will be repaid before interest is charged. “
Concerns about repayment
There is also concern that up to 60 percent of loans will never be repaid. The Board of Audit, the government’s spending watchdog, said the ease of applying for the scheme could cost taxpayers £ 26 billion due to fraud and default.
“Government lending schemes run the risk of having unsustainable levels of debt, and many have a hard time paying back,” said Franboate, executive director of nonprofit research firm Positive Money.
Nonetheless, for business owners, including Ratcliffe, loan schemes have provided safety nets to help withstand any financial shock. “I took out a loan because I was faced with fixed recurring expenses without income. Hopefully we will be given enough cash to survive the next six months. Force a mortgage I didn’t expect it to be done, but unfortunately it’s time. “
Emergency plans assist companies through Covid when the blockade reoccurs
Source link Emergency plans assist companies through Covid when the blockade reoccurs