This scheme will help small and medium-sized businesses affected by coronavirus (COVID-19) to apply for loans of up to £50,000.
The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and £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
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).
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.
More information about the scheme will be published shortly.
- Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
- Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form
- All firms trading as of March 1 will be able to get cash
- Banks will no longer require forward financials or business plans
The microbusiness Bounce Back Loans scheme is capped at 25 per cent of turnover and promises a streamlined application process.
Treasury says that the new microbusiness loan scheme will open next Monday, May 4 and will deliver cash to successful applicants within 24 hours.
As with the Coronavirus Business Interruption Loan Scheme, the British Business Bank will administer the Bounce Bank Loans, which will be offered by the 50 plus banks currently taking part in CBILS.
To persuade banks to lend the money, the taxpayer will cover 100 per cent of their losses if a borrower defaults.
Rishi Sunak, the chancellor, said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.”
You can apply for a loan which is up to 25% of your turnover in calendar year 2019, from a minimum of £2,000, up to a maximum of £50,000.
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Key features of BBLS
- Apply for 25% of turnover up to a maximum of £50,000 (minimum £2000)
- Simple, seven-question application form
- If you’ve already taken out a CBIL up to £50,000, you can apply to switchover the BBLS
- The loans are backed by 100 per cent government guarantees
- The government will pay the interest for the first 12 months and no repayments will be made during this time
- BBLS are for up to six years
- There will be no early repayment fees
- There will be a flat rate of 2.5% interest following the initial 12-month interest free period
Who’s eligible
The Scheme is open to most businesses, regardless of turnover, who meet the eligibility criteria and who were established on or before 1 March 2020. Borrowers are required to declare, amongst other things, that:
- It’s UK-based in its business activity, and established by 1 March 2020
- It’s been adversely impacted by the Coronavirus (Covid-19)
- It’s not currently using a government-backed Coronavirus Loan Scheme (unless using BBLS to refinance a whole facility)
- It’s not in bankruptcy, liquidation or undergoing debt restructuring
- It isn’t a bank, building society, insurance company, public sector organisation, state-funded primary or secondary school, or an individual other than a sole trader or a partner acting on behalf of a partnership.
- On 31 December 2019 the business was not a “business in difficulty”
- More than 50% of the income of the business (together with that of any member of any group of which it is a part) is derived from its trading activity
- It will use the loan only to provide economic benefit to the business, and not for personal purposes