Alan Richardson, Business Protection & Group Leader, LifeSearch
Business in the UK is having a tough time. Even before COVID-19 struck, many of our customers had been looking at their business models and cash flow.
Proposed IR35 changes had seriously damaged the confidence of many entrepreneurs, and the dreaded Reverse VAT charge was slowly being rolled out to the construction industry. In fact, Managing Directors, Finance Directors, Partners and sole traders in every sector had some head scratching to do in the wake of Brexit, technology development and climate change.
The Chancellor extended the Coronavirus Business Interruption Loan, and with the introduction of the Business Bounce Back loan (BBL) extra funds will be a lifeline for many business owners. The scheme, already affectionately known as “Beble”, gives access to a Government 100% backed loan for up to 25% of a business’ turnover, or £50,000, whichever is less.
The application has been designed to be as simple as possible – with the application form itself being just two pages long. Lloyds Bank reported that on the first day, an unprecedented £1bn of loans was agreed. It appears there is little to deter a company taking the loan. No payments are required for the first 6 months, the loan is interest free for the first 12 months, and interest is just 2.5% for the remaining 5 years. With no early redemption fees, it’s difficult to see many companies passing up the cheap finance.
What this does highlight however is the every growing reliance on Finance within business. These programmes may be backed by us as taxpayers, but this is only on the assumption the business folds. The money is not a grant, but a loan to be repaid. Throw into the mix the overdraft, the directors loans that started the company, and the other many forms of available finance, then it is clear that illness or death will start putting a lot of stress on the business.
No longer will business owners see Illness as something that affects other people. Our own mortality, and those of our loved ones has become a real consideration. Going forward, lenders themselves will surely want to see that their finance is secured, and not just against the family home. The loss of people within the company that previously could have been managed will further put pressure on reducing bottom lines.
No matter what your plans are this moment in time, never before has it been so important to review your protection programme. Whether it’s to convert your Relevant Life Cover into personal cover, protect your business and personal finances from any current or planned lending - or simply to give your employees access to services that make your company a better place to work (what distinguishes one ‘Working from Home Employer’ to another now?) Taking a few minutes to discuss your needs and develop a Plan B seems like a sensible thing to do.
Get in touch with an expert LifeSearch adviser, and we’ll do the hard part for you. Advice is free, without obligation - and award winning advice with a 4.9/5 Trustpilot ‘excellent’ score from over 11,500 reviews.Get started with Revolut Business today