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LETS GET DOWN TO BUSINESS.

Question :
Can I use the Government Small Business loan to pay off existing business loans?

Question submitted 22/04/20 @ 12:06pm
Industry: Funding & Finance
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  • Unfortunately you can not. I have looked into this in some detail for my clients and it clearly states in the rules governing this product you can NOT use it to repay existing loans with your bank.

    I see where you are coming from as these 80% govt guaranteed loons will be priced between 2%-4% depending on your credit risk grade with your bank and obviously material cheaper than a standard overdraft or bank loan.

    If you want any further information let me know as I have a small business pack on the govt guarantee loans.

    Cheers
    Chris

    HI

    The primary purpose is to keep businesses afloat by providing a cash advance primarily for working capital purposes.

    If it’s repaying lending from the same lender I would doubt that the government guarantee would be capable of extending to existing borrowings.

    If it was to pay off loans from other parties then maybe as a way of restructuring all loans and security to aid your bank to provide new facilities but even then I would doubt that would be permissible under the scheme unless the amounts were for a relatively small proportion of the new funding request.

    No harm is asking that question of your bank before submitting application.

    Thanks Chris.
    I’d be interested in your business pack you mentioned.
    How do I do that?

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