There has been a welcome announcement in relation to the availability of further loans for smaller businesses. The Bounce Back Loan Scheme will hopefully help smaller business manage with today’s environment and also prepare for a future after COVID-19.
Bounce Back Loans
The Chancellor, Rishi Sunak, has announced the Bounce Back Loan Scheme to specifically help small businesses manage through the COVID-19 pandemic. If you are a smaller company and have struggled to get a CBILS loan this could be an alternative option for you.
The Bounce Back Loan scheme will be available from Monday, 4 May 2020 and will be administered by the British Business Bank. Businesses will apply via a short online form and will not be required to provide forward financials or business plans, however some fraud checks will have to be completed. Loans should be paid within 24 hours of approval.
- loans must be between £2,000 and £50,000
- loans will be capped at 25% of a business’s turnover
- loan terms will be up to 6 years
- no fees or interest to pay for the first 12 months
- no loan repayments will be due during the first 12 months
- to quote the Chancellor, “a low standardised level of interest for the remaining period of the loan”
- the government will provide lenders with a 100% guarantee for the loan.
We are waiting for confirmation if there is a limit to the size of business that can apply. As of 28 April 2020 you can apply for a loan if your business:
- is based in the UK
- has been negatively affected by COVID-19
- was not an ‘undertaking in difficulty’ on 31 December 2019
The following businesses are not eligible to apply:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- further-education establishments, if they are grant-funded
- state-funded primary and secondary schools
If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, this is possible but you must arrange this via your lender before 4 November 2020.
More information can be found here on the GOV.UK webpage.
As ever, we are available on our usual email and phone contact details, so please do get in touch with any queries or questions. We are here to help.
Information correct as of 28 April