Bounce back loan - what is classed as 'adversely affected'?

jjdc

I had read up about it. One of the conditions was it was for a business adversely affected.

The only HMRC guidance for what adversely affected means, is here, but this is for the self employed scheme (I'm ltd contractor)

https://www.gov.uk/guidance/decide-if-your-business-has-been-adversely-affected-for-the-self-employment-income-support-scheme

Is this the same definition for bounceback loan eligibility?

If so, surely by this definition every booming business is entitled to it.

• • you had to buy protective equipment so you could trade following social distancing rules

I had to buy a £5 facemask to visit clients office for our monthly meetings, without which I probably wouldn't be paid for that day, so in theory I fulfill this criteria. Putting morals to one side, what is to stop me also applying, investing it, buying a Tesla etc?! No wonder it's open to abuse! Doesn't seem fair that the general public, many of whom have been living off savings to see them through will be taxed indirectly to pay for these schemes. 

Grumpy_chap

The criteria for 'adversely affected' are quite loose.  Another requirement is that the funds can only be used for business purposes.  That could include buying a Tesla.  The loan will still need to be paid back.

jjdc

True, but it's 0% year 1, and 2.5% after that, better than any commercial, or indeed personal loan, and can be paid over 10 years. Tbh, it seems like businesses would be daft not to apply for it.

Grumpy_chap

jjdc said:

it seems like businesses would be daft not to apply for it.

That is a rational view.  Especially for the first year at zero percent, even if the business does not envisage needing additional funds, it provides an enhanced safety net and can be fully repaid within the period at no cost.

I have seen some suggesting doing exactly that and putting the money in an interest bearing account.  Given current interest rates, that seems hardly likely to yield a return to warrant the effort.  Doing the same, but in a higher-risk, higher-yield investment could back-fire IMO.

One further observation is that there have been some comments on the loan and mortgage boards where people have posted that they have taken BBLS 'just in case' but did not really need it and latterly found that the ability to obtain a mortgage or other personal finance has been impacted because the banks decrease the amount they are willing to lend on the basis that the company accounts need to be ratio'd down to reflect that the business took the BBLS, a requirement of which is a statement that the business was "adversely affected" and therefore, the business was not sufficiently financially resilient to support a 3-month impact to trading and the business may not be able to sustain itself through a repeat event where the same type of Government support may not be available.  Obviously, as you have noted above, "adversely affected" in terms of qualifying for the BBLS can be very minor, but banks may not see, or wish to see, that as the case.

I cannot verify the approach as it is merely what people have posted in the appropriate boards in the forum, but that would be one consideration as to why a business would choose not to apply for the BBLS.