How do I account for the Business Bounce Back Loan i receied?
The Bounce Back Loan Scheme has been a success in providing firms with vital government-backed loans at a low, affordable rate and with no interest or repayments due in the first year. Many business owners have applied and received loans of up to £50,000 to help them through the pandemic
One of the most common questions I am asked is ‘how do I account for the Business Bounce Back Loan I received? Here is what you need to know, but please get in touch as it is vitally important to get it right.
When you receive the money into your bank account you will be creating a debit/increase amount of the loan value, the double entry side of this money will be credited to a new Balance Sheet account called Business Bounce Back Loan. It is not revenue received and will not be treated as income it is known as a long-term liability account.
The length of the loan is 6 years, but you can repay early without paying a fee, and no repayments will be due during the first 12 months. If you’ve already received a loan of up to £50,000 under one of the other Government schemes you can transfer it into the Business Bounce Back Loan Scheme. You have until 4th November 2020 to arrange this with your lender.
The Bounce Back Loan money should not be used for Director Dividend payments
DO NOT FORGET THIS IS A LOAN AND NOT A GRANT AND IT WILL HAVE TO BE PAID BACK IN FULL
If you have not applied for the Business Bounce Back Loan and feel it would be useful to do so, please click on the link https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan
Fiscal Business Services Ltd
07403 216682/01793 915050