The Bounce Back Loan Scheme for small businesses

by | Apr 28, 2020

The Government announced yesterday (27 April) the introduction of a new loan scheme to assist small and medium size businesses who need vital cash injections to keep operating and can get finance in a matter of days.  

Unlike the earlier CBILS loan scheme the government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible. Because this scheme is backed 100% by the Government banks are not liable for losses under the scheme and they will not have to carry out their normal full credit checks and procedures which can time be consuming.  

This scheme will launch on Monday 4 May 2020. 

The Bounce Back Loan scheme (as it will be known) will help small and medium-sized businesses to borrow between £2,000 and a maximum of one quarter of your last year’s turnover subject to a maximum cap of £50,000

The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. 

Loan terms will be up to 6 years. No repayments will be due during the first 12 months. 

The government will work with lenders to agree a low rate of interest for the remaining period of the loan.  

The scheme will be delivered through a network of accredited lenders.  

Eligibility 

You can apply for a loan if your business: 

  • is based in the UK
  • has been negatively affected by coronavirus
  • was not an ‘undertaking in difficulty’ on 31 December 2019 (broadly if your balance sheet is in deficit)  

Who cannot apply  

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’re already claiming funding 

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

However, 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. 

How to apply 

The Bounce Back Loan scheme will launch on 4 May 2020. 

The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days – providing immediate support to those that need it as easily aspossible. 

Only basic details are required to verify the company exists and is eligible. Company directors self-certify that the information they provide is correct and their lender then decides whether or not to approve the loan. Companies may be required to provide a tax return in a small number of cases. 

Only businesses that existed on 1 March 2020 can apply.

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