Bounce Back Loans

The government have listened to taxpayers who were concerned that the Coronavirus Business Interruption Loans didn’t fit the size and requirements of smaller businesses and have therefore announced a different type of loan, launching on Monday 4th May 2020.

These are loans of between £2,000 and £50,000 to assist businesses that have been affected by the coronavirus crisis.

Eligibility

All business types can apply, sole traders, partnerships and Limited Companies if you are based in the UK

Your business must have been negatively affected by the Coronavirus crisis

You business must not be an undertaking in difficulty* as at 31st December 2019

Terms of the Loan

You will be able to apply for up to 25% of your turnover (sales)

The term of the loan will be 6 years. 1 year with no repayments and then a further 5 years thereafter. You can repay early at any time. 

There will be a short standardised online application

There will be no requirement to prove future viability of your business

The loan is 100% government backed. This means that whilst you are entirely responsible for the loan in the event of default the lender will not suffer any loss as the government will pay.

There won’t be any fees or interest to pay for the first 12 months but bear in mind that this may not be interest free as it is likely that the first years interest will roll-up (be added) to the loan

There will be no repayments to make in the first 12 months

There is a plan by the government and lenders to agree these loans and deliver the funds within days of application

UPDATE 2nd May – the government has advised lenders that the interest rate is to be 2.5%

The government and lenders have agreed to work together towards a reasonable interest rate after 12 months.

Other

These loans will be available via 40 accredited lenders including High Street banks.

The following businesses are not eligible to apply:

• banks, insurers and reinsurers (but not insurance brokers)
• public-sector bodies
• state-funded primary and secondary schools

Important

1. *The full definition of an undertaking in difficulty has not yet been released so it is unclear how many businesses this will apply to and we will update this item once we have more information.

2. You can’t apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

3. 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, you can arrange this with your lender until 4 November 2020.

Remember that this is still borrowing and you are still responsible for the loan and all repayments. If you fail to make the repayments then the lender will follow all of its available debt collecting measures before falling back on the government guarantee.

These loans are bound to be popular and may well be capped in terms of the amount that lenders / the government will issue so if you are interested you should give it your early attention.