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What is the Bounce Back Loan Scheme?

29 April 2020
Gavin Hooker
COVID-19, Accounting & Compliance, Payroll, People, Raising Finance

Increased pressure from businesses unable to access the Coronavirus Business Interruption Loan (CBILS) funding has led to the government announcing a new loan scheme for those in need of smaller loans.

The help for businesses is ever changing and now alongside the Business Interruption Loans, businesses are able to apply for Bounce Back Loans (BBLS). This scheme allows businesses to borrow micro loans up to 25% of their turnover. This borrowing starts at £2,000 and is capped at £50,000. The government will pay the interest for the first 12 months and will provide a 100% guarantee to the lender. Additionally no repayments will be due during the first 12 months of the loan period.

By backing these loans by 100%, compared with the bigger CBIL scheme, the government is protecting the risk to taxpayers of today and tomorrow as much as they can whilst trying to support the smallest businesses.

As with the CBILS, these loans will be for up to 6 years and the government will work with lenders to agree a low rate of interest for the remaining period of the loan after the first 12 months.

So who is eligible?

You can apply for a loan if your business:

  • Is based in the UK
  • Has been negatively affected by coronavirus
  • Has more than 50% turnover from a qualifying trade
  • Was trading on or before 1 March 2020, and continues to trade now

Those businesses not eligible to apply are:

  • Banks, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • State-funded primary and secondary schools

What if I am already claiming under CBILS?

You cannot apply if you are already claiming under the Coronavirus Business Interruption Loan Scheme.

However, if you have 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 do I apply for this scheme?

This scheme went live from 9am on Monday 4 May and for those businesses that apply, it is believed that the loans should arrive within 24 hours of approval.

To apply businesses should check the British Business Bank website to find out which lenders provide Bounce Back Loans, details can be found here.

There will be no forward-looking tests of business viability, no complex eligibility criteria, just a simple, quick, standard online form for businesses to fill in.

We will continue to update this guidance as more information is released.

We are here to support your business, if you have any concerns please call us or email Mark or Andrew.

The content in this blog is correct as at 05/05/2020. See terms and conditions.

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