As you may know the Government is making loans available for businesses impacted by Coronavirus on very favourable terms. The loans are fully government backed and would not normally impact on existing lenders.
The only proviso to this is where a borrower withdraws the money from a business to fund an off-farm investment which may impact on the asset to debt ratios which the main bank might use to assess risk and future cost of borrowing.
You probably know that the loans are up to £50k, no initial charges, interest free for one year, no repayments due for one year then repayable over five years with interest at 2.5%.
Whilst some of our clients are using the money to fund cash flow gaps where they have experienced milk price reductions some are using the loan to replace expensive short term HP, to reduce overdrafts or even to fund off farm investments such as property deposits the income from which will then fund the repayments due in years 2-6. One client has even suggesting buying £50k of premium bonds and holding them for 12 months before cashing in and repaying the loan before interest becomes payable.
If you or your clients need anything further do let me know. You can contact me by clicking here.