£50K Interest Free Loan for 12 Months

[SussexSeagull]

Anyone applied through HSBC lately? I did last Friday and haven't heard anything (admittedly there was a Bank Holiday in the middle).

[ladymuck]

BBL is giving me serious FOMO (Fear of Missing Out).

Read this thread with interest. I am in a contract until end of November, which will take me to 18 months, and has gone very well, thank you. I've also just welcomed second daughter into the world, so feeling a little vulnerable as a contractor in current climate. I have a modest warchest, but recent move and that I've only contracted for 2.5 years means it's only worth 3-4 months, possibly 6 at a push with mortgage holidays etc.

Project I am on is scheduled to end in November, and no delays anticipated, so I'm expecting to be back on the market and a time when it may well be the most difficult to secure a new gig.

Part of me thinks I should apply for the loan as a just-in-case, other half thinks that currently, if anything, I've benefitted from Covid due to savings on commute so morally I should let this one pass my Ltd company by. A small part of me even thinks chuck it all on black, apply for loan, transfer to another company and use it to get a foot on the BTL ladder.... Cheap loan to cover some of the deposit, use monthly income to cover most of the payments after Y1, after 6 years you have a BTL that provides a decent income. But, I suppose, morally that would be utterly reprehensible.

Is applying as a "just-in-case" a valid rationale? Is there any danger of the scheme being pulled, or is the up until November a government guarantee?

Highly unlikely that it'll be pulled before November.

However, what adverse impact has CV had on your business? Nothing yet, it seems, that justifies you needing it and the contract end isn't a surprise that you can't plan for.

Whilst checks are minimal and it's unlikely anyone will follow up, it's still a debt and you should think about that before you go shopping.

[simes]

A sort of half-interesting thought popped into my head.

All the contractors who have taken on this BBL, what happens when by mid next year, IR35 Reform makes it impossible for them to pay it back?

How much traction will the statement, 'The government who helped me during Covid, has in turn prevented me from earning into MyCo to repay it' have?

Director to LtdCo loans aside, it's a bit of a pickle.

[jamesbrown]

A sort of half-interesting thought popped into my head.

All the contractors who have taken on this BBL, what happens when by mid next year, IR35 Reform makes it impossible for them to pay it back?

How much traction will the statement, 'The government who helped me during Covid, has in turn prevented me from earning into MyCo to repay it' have?

Director to LtdCo loans aside, it's a bit of a pickle.

Obviously, none. IR35 doesn’t prevent you using a company or paying it back.

[SussexSeagull]

As HSBC are apparently taking two to three months to process loans I may never get the chance to find out.

[simes]

Obviously, none. IR35 doesn’t prevent you using a company or paying it back.

And, how's that?

If one is prevented from using one's LtdCo due to blanket direction for contractors to use Umbrella companies, then IR35 reform, and its (mis)use thereof, kinda does.

Excepting, as - I - had - said, for the Director to LtdCo loans.

[jamesbrown]

And, how's that?

If one is prevented from using one's LtdCo due to blanket direction for contractors to use Umbrella companies, then IR35 reform, and its (mis)use thereof, kinda does.

Excepting, as - I - had - said, for the Director to LtdCo loans.

Not sure why you’re struggling here.

Either get a contract that is outside or one that is inside and doesn’t mandate no Ltd company or, worst case scenario - as - you - said - yourself - you can loan the company the money from your taxed income. If you extracted the cash as a DL, then you obviously pay it back like that.

[simes]

Not sure why you’re struggling here.

Either get a contract that is outside or one that is inside and doesn’t mandate no Ltd company or, worst case scenario - as - you - said - yourself - you can loan the company the money from your taxed income. If you extracted the cash as a DL, then you obviously pay it back like that.

This was only supposed to have been a casual remark.

But if we can pretend you understand me, and maybe the nationwide situation for contractors, 'Getting an Outside IR35 contract' is no longer as simple as it once was. Even now, never mind come April 2021. Is this new to you?

And, I, or one, hasn't extracted anything as a DL. I am saying it would be, in the fullness of time, a loan From the director Back to the LtdCo to make good on a LtdCo loan from the Govt. As a way through.

Anyway, I am sure you get the drift. Looking smart at this point isn't really the point.

As a lone voice perhaps, I am wishing all those Director contractors who took a BBL the wherewithal to get an Outside IR35 contract to simply effect the payback.

James will continue to say there is no issue in the world and so, what is the point of this post...

[jamesbrown]

This was only supposed to have been a casual remark.

But if we can pretend you understand me, and maybe the nationwide situation for contractors, 'Getting an Outside IR35 contract' is no longer as simple as it once was. Even now, never mind come April 2021. Is this new to you?

And, I, or one, hasn't extracted anything as a DL. I am saying it would be, in the fullness of time, a loan From the director Back to the LtdCo to make good on a LtdCo loan from the Govt. As a way through.

Anyway, I am sure you get the drift. Looking smart at this point isn't really the point.

As a lone voice perhaps, I am wishing all those Director contractors who took a BBL the wherewithal to get an Outside IR35 contract to simply effect the payback.

James will continue to say there is no issue in the world and so, what is the point of this post...

Didn't I list three options, of which getting an outside contract was one?

I guess you didn't really think this through. If you're hoping you can walk away from the BBL because you cannot secure a contract outside of IR35 or one where the fee payer agrees to contract with your company, then best of luck to you. I think your creditors will think differently and they will probably have a very good case. If any prospective client is mandating no PSCs or a contract that is inside, the debt remains and you'll still need to pay it back, end of story. It remains to be seen how aggressively your debt will be pursued by either the bank or HMG. Assuming they pursue it - as I think they will - then my point about the DL is that, if you chose to extract the BBL that way, then there is absolutely no argument about how the money is paid back. You've clarified that you didn't extract it that way. Am I supposed to read your mind? The question, then, will be whether you've met your statutory duties as director. TBD.

[SussexSeagull]

Didn't I list three options, of which getting an outside contract was one?

I guess you didn't really think this through. If you're hoping you can walk away from the BBL because you cannot secure a contract outside of IR35 or one where the fee payer agrees to contract with your company, then best of luck to you. I think your creditors will think differently and they will probably have a very good case. If any prospective client is mandating no PSCs or a contract that is inside, the debt remains and you'll still need to pay it back, end of story. It remains to be seen how aggressively your debt will be pursued by either the bank or HMG. Assuming they pursue it - as I think they will - then my point about the DL is that, if you chose to extract the BBL that way, then there is absolutely no argument about how the money is paid back. You've clarified that you didn't extract it that way. Am I supposed to read your mind? The question, then, will be whether you've met your statutory duties as director. TBD.

I agree with that to a point but Limited Companies exist for a reason and that is to keep individuals financial affairs separate from a corporate entity. If the debt is against a company and was distributed reasonably (e.g. salary) then the Director as individual goes and gets a FTC or Inside IR35 contract through an Umbrella it has nothing to do with the Ltd.

Note I am not recommending doing it but I can see it happening quite a lot.