New Govt Bounce Back Loan - Should I go Ltd before applying?

Squeaky_Kleen · 28 April 2020 at 5:17AM

I've just completed my first year as a sole trader. I understand I'll be able to apply for a new bounce back loan of around This would give me a real boost, but I'm wary that as a sole trader, should I have any financial issues in the future, the debt would be my personal responsibility. Would it be sensible to convert to a Ltd company before taking this debt on? Or would it then be regarded as a new business and therefore ineligible for the loan?
Also I've been fairly disorganised and not used a separate business account for my first year of trading, what proof will the lenders need to show that I'm a legitimate business? Will my UTR be enough? I've not submitted my 19/20 self assessment yet , but I will get it done ASAP if that will help?

Jeremy535897 · 28 April 2020 at 7:52AM

You would need to speak to the lender about it. A lender in normal times would almost certainly seek a personal guarantee from you if it was lending to your limited company, but that may not be the case for these loans. There are other consequences of using a limited company, including increased compliance and accounting costs.Transferring the trade to a limited company would prevent a claim to SEISS, but if you started your sole trade after 5 April 2019 you are not entitled to that anyway.