Government Loans – The Underlying terms

Dear all,

The Government loan scheme was heralded as the solution to our problems. We suggested that it was not. As is so often the case, the devil is in the detail. So here is some detail. I talk about this on the Radio.

Bottom line, be very careful signing a personal guarantee. From personal experience the Banks do not play with a straight bat. If you want to know more feel free to contact me on nick@welhatchamber.co.uk.

Ask yourself why the bank is seeking a 100% personal guarantee in addition to the Government’s guarantee? What is the interest rate? We dont know. Is it fixed? Does the government guarantee 80% of capital plus interest? If so you should be on the hook for 20% plus interest. Not 100%

A letter from a High Street Bank.

I write to advise you of the basic details and requirements of the new government loan scheme:
 
Loan Term – 1 – 6 years (Overdrafts are not available via this scheme but they can be considered through the normal process)
 
A personal guarantee is required for 100% of the loan. This is in addition to the 80% government guarantee
 
12 month fixed rate loan at 0% – (capital repayments only to be paid) after which it will switch to the variable rate
 
SECURITY –
 
£25k – £100k – short form guarantee
£100k – £250k – short form guarantee & debenture
£250k+ Full personal guarantee, Debenture + security if available (your home will not be taken as security)
 
Government Scheme Rules:
Maximum loan amount – 25% of your 2019 turnover or 2x your 2019 wages bill – whichever is greater
 
Serviceability will be assessed on your 2019 year end accounts, up to date management information and forecasts if available
 
Please let me know how you wish to proceed and the amount/term that you require and kindly send me the above financial information asap.

 

 

 

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