REVISED: Get every FMD loan going

The VAT and tax authorities have been charged with taking a ‘very sympathetic approach’ to businesses which are experiencing financial problems as a result of the FMD outbreak. This means, with not a lot of effort on your part at all, you can request deferred payment of taxes and NI contributions and agree extended arrangements

for payment.

One major supplier told bikebiz.co.uk he went through on the special VAT telephone helpline listed on a previous FMD story on bikebiz.co.uk and his details were passed to his local office. When they rang up they asked a few simple questions and, on the spot, agreed to defer his VAT payment for three months.

And, while you may scoff at the thought of government soft loans, did you realise they can be paid back over many years and you can even apply for mega long payment holidays?

Just about any bicycle business which can prove its takings are down can apply for these ‘tide-you-over’ loans.

As mentioned last week on bikebiz.co.uk the soft loan scheme is operated via an extension to the Small Firms Loan Guarantee Scheme. Apply via your bank. The Small Business Service (the government’s enterprise arm, in existence since last April) underwrites most of the loan.

The FMD SFLGS scheme offers loans repayable over up to 11 years with optional repayment breaks of up to three years. The existing scheme had 10 year repayment plans and two year breaks.

19 lenders are participating in this new scheme, including all the main clearing banks.

Loans are available for periods between 2 and 10 years on sums from £5,000 to £250k. In return for the guarantee the borrower pays the Small Business Service a premium of 1.5% per year on the outstanding amount of the loan. The premium is reduced to 0.5% if the loan is taken at a fixed rate of interest. The commercial aspects of the loan are matters between the borrower and the lender.

If you took out a £15,000 loan under this scheme at an interest rate of 8.75%, for example, during the capital repayment holiday you would pay back just under £120 a month including the premium. A bargain, then.

To be eligible you must be a UK company with an annual turnover no more than £1.5m (£3m if you are a manufacturer).

Government minister Stephen Byers said:

"This is a further way the Government can provide significant targeted support to those businesses directly affected by foot and mouth disease, building on the measures already announced like extended rate relief and flexibility on tax payments."

"There are no quick fixes, but we must and we will do all we can to alleviate some of the problems that businesses across the country are facing now."

"It is important that businesses receive this help as quickly as possible and I am pleased to say that the banks have agreed to treat with urgency all applications for loans from businesses affected by foot and mouth disease."

"Making it easier for firms to get financial support will make a significant contribution towards helping those businesses most badly affected at this difficult time."

The lenders are:

Allied Irish Banks/First Trust Bank

Bank of Ireland

Bank of Scotland

Barclays Bank

Clydesdale Bank

Co-operative Bank

Doncaster Business Advice Centre

Lloyds TSB Group

London Enterprise Agency (LEntA)

HSBC Bank

Northern Bank

National Westminster Bank

Northern Venture Managers Ltd

Royal Bank of Scotland

UK Steel Enterprise

Ulster Bank

Venture Finance plc

Yorkshire Bank

Yorkshire Enterprise Ltd

Further details from the SBS Loan Guarantee Unit:

Tel: 0114 2597308/9

Fax: 0114 2597316

e-mail: sflgs@sbs.gsi.gov.uk