The Bounce Back Loan Scheme (BBLS) is a new scheme designed to enable businesses to access finance more quickly during the coronavirus outbreak.
ABOUT THE SCHEME
The Bounce Back Loan Scheme (BBLS) provides financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak and that can benefit from £50,000 or less in finance.
HOW IT WORKS
BBLS is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website.
- An accredited lender can provide a 6 year term loan from £2,000 up to 25% of a business’ turnover. The maximum loan amount is £50,000.
- The scheme is open to most UK businesses, regardless of turnover, who meet the eligibility criteria and who were established on or before 1 March 2020. In addition, more than 50% of the income of the business must be derived from it’s trading activity.
- The business confirms to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes.
- In some instances the lender may ask for additional information such as an HMRC self-assessment tax return.
- Certain “businesses in difficulty” are excluded.
- The scheme provides the lender with a 100% government backed guarantee against the outstanding balance.
- The Government will pay interest and fees for 12 months.
- The interest rate for the facility is set an 2.5% pa meaning businesses will all benefit from the same rate.
- The length of the loan is 6 years but early repayment is allowed, without early repayment fees.
- Lenders are not permitted to take personal guarantees or recovery action over a borrower’s personal assets, (such as their main home or personal vehicle).
- A business is not able to take out a Bounce Back Loan Scheme facility if they have been approved for a Coronavirus Business Interruption Loan Scheme facility, and vice versa.
- The Scheme will initially remain open until 4 November 2020.
- Businesses should approach their own bank via the lender’s website in the first instance. However, if the businesses own bank does not operate the scheme, (or is waiting to be accredited), they may consider approaching other lenders, (via their websites).
- A short Application Form is available on-line, (via the lenders website), which self-certifies that the business is eligible for a loan under BBLS.
- The lender has full discretion to decide whether to offer the finance and will generally aim to get the money into the businesses bank account within 48 hours.
Naturally, the borrower remains 100% liable for the debt.