The Government has launched a raft of grants and loan guarantee arrangements since the Coronavirus lockdown started.
In most cases the grants are non-repayable and treated as your taxable income.
A loan, on the other hand, will result in an obligation to repay at some future date. Even where the Government has guaranteed between 80% and 100% of the loan taken out, the cash received will be classified as a liability, and not as income.
You will be expected to repay the full amount borrowed, including any accrued interest in excess of the amount covered by the Government.
You will need to carefully plan to ensure that where you have borrowed, to see you through the Covid-19 disruption, you are confident that you will generate the financial resources to enable repayment of the loan. We can assist with cash flow forecasting and creating a financial plan.
Borrowing to fund losses that eventually exhaust your hard-earned retained profits may result in insolvency.
If you are considering a loan, you may be asked to submit management accounts and forecasts to support your application. Please call us if you need help with this process ((08000) 388 799)
Reproduced from Informanagment