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Can landlords use the Bounce Back Loan Scheme?

I had presumed that the minimum 50% trading income requirement would preclude most landlords claims.

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I see from numerous landlords forums that there is a strong belief that the BBLS can be used even where the applicant's income is predominantly from rentals. Furthermore there is an opinion circulating that "trading" (as tax practioners would define it) is not relevant, as the BBLS is a simply a government backed banking arrangement that has nothing to do with tax. It appears to me that many landlords are jumping on the bandwagon and are submitting their claims, some already boasting that they have received the money. I am also mindful of my landlord clients asking me why I told them that they are ineligble for the scheme if indeed they are eligible after all.

Despite umpteen google searches I have found practically no commentary on this confusion, so perhaps it's only in my head? Can anyone offer a conclusive verdict or point to an explicit government statement on the matter?

Thank you.

Replies (8)

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By Wanderer
15th May 2020 11:32

Don't know much about the BBLS however is 50% relevant or is the SEISS being confused with the BBLS?

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Replying to Wanderer:
Ian Steadman BSR Bespoke
By Steadmani
15th May 2020 15:02

Extract from the British Business Bank website section on BBLS eligibility:

"Your business must be able to self‑declare to the lender that it..........derives more than 50% of its income from its trading activity (this requirement does not apply to charities or further-education colleges)"

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By AnthonyDavidMain
15th May 2020 13:51

Not for your average BTL landlord, but I was eagerly awaiting guidance from the BBB as to whether my FHL clients [who don;t qualify for SEISS] would satisfy the BBLS criteria.

Due to the lack of guidance, I asked the BBB directly for input with the following email:

A number of my clients were eagerly awaiting this Scheme, as they qualify for very little CV19 support through other Schemes; I’m not knocking the Government at all, it’s just a simple fact and I fully appreciate the Government can’t cover all basis and that they’re doing a good job with what they have done.

The reason this group of clients can’t qualify for, say, the SEISS is because of the definitions within the scheme; the SEISS requires an individual to have trading profits and this particular group of clients own and manage self-catering holiday accommodation, which is absolutely a business [carried on commercially etc with multiple properties] but it doesn’t meet the exact tax definition of trading.

From what I can see on the BBLS, I’m a little confused/concerned that they may not qualify under this scheme either, because the criteria:

1. Helpfully states “the business is engaged in trading or commercial activity” as to which these holiday accommodation businesses are commercially active and trading, unless that latter point is specifically defined under the taxes act like SEISS; however

2. Unhelpfully states “more than 50% of the income of the business… is derived from its trading activity” whereby again, I can’t see any specific definition of this term but I fear, if there is one other than the dictionary definition, this could be another blocker.

I don’t suppose you could clarify, please? Is the term trading defined, or would a property-backed business such as holiday accommodation [multiple self-catering cottages serviced and managed and let week to week by the owner] qualify as trading? The businesses generally operate as family partnerships, drawing up accounts and paying tax on their profit.

Sadly, what I got back from the BBB was just their FAQs which don't cover off any of the above.

For my part, I don't believe the term trading is specifically defined for the BBLS as it is the SEISS, so I suggested to my FHL clients that they speak with their bank, who I am pleased to say agreed and advanced loans under the BBLS on the basis the clients in question were carrying out commercial activity.

Thanks (1)
Replying to AnthonyDavidMain:
Ian Steadman BSR Bespoke
By Steadmani
18th May 2020 20:45

Many thanks for your response Anthony. I think the confusion is once again the outcome of the government rushing an initiative through without fully thinking it through. Like yourself, I don't mean to knock them at all, they are doing their best in unprecedented circumstances. However, the fact that the banks have agreed applications from property investment businesses is not in my view a vindication of their eligibilty, it is simply because those businesses have been allowed to self assess their eligibilty.

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Replying to Steadmani:
By AnthonyDavidMain
15th May 2020 14:49

I do agree in relation to one self assessing one's eligibility being a route for many investors, however, just in case it gives you any peace of mind, two of my FHL clients spoke with their normal relationship manager [different people in different branches but of the same bank] in advance of making a BBLS application and were totally transparent... as you'd imagine, the relationship managers had some knowledge of what the businesses were doing and were more than happy to advocate applications under the BBLS.

Totally appreciate this still isn't full vindication though.

Have a good day, A

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Replying to Steadmani:
Ian Steadman BSR Bespoke
By Steadmani
15th May 2020 15:01

A further point, I've only just noticed that you refer specifically to furnished holiday lets. Although these are a trade in some respects, they appear to not qualify for SEISS simply because they are not reported on the self employment pages of a tax return and would not therefore link to HMRC's records of self employment. However, I think that the "trade" element may well be sufficient for them to qualify for the BBLS, the latter scheme not being connected in any way to the tax return.

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Jennifer Adams
By Jennifer Adams
18th May 2020 18:53

An HMO landlord client of mine rang HMRC about the SEISS. Apparently he asked the person on the line and they said that he was entitled to claim. I had already told him he couldnt but still...up to him.

Went all quiet and when I spoke to him on another day was proved right.

Then he tried to get a Boris Bank Loan and when he rang the bank was told to send in his tax return.

I told him that wasnt necessary and to try another bank (HSBC dont require you to be an account holder). He's applied and got the money but there again the form doesnt ask much.

Only has landlord income. I guess its all down to what you put on the application form.

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Replying to Jennifer Adams:
Ian Steadman BSR Bespoke
By Steadmani
18th May 2020 21:07

Hi Jennifer,

I agree with you as far as the BBLS is concerned insofar as it appears to be down to self assessing one's entitlement. He would of course have to bear the consequences if a subsequent check challenges that entitlement, but given that it's hard to see these loan applications being vetted later (unless they are defaulted on), the ice may not in reality be as thin as I had originally suggested to my clients.

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