The UK Government has announced a new fast-track finance scheme, providing loans with a 100% Government-backed guarantee for lenders. The “Bounce Back Loans” scheme will provide small businesses with loans between £2k and £50k.
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days. The Government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No capital repayments will be due during the first 12 months, and loan terms will be up to 6 years. The maximum amount that a business will be able to access through the scheme will be the lower of 25% of turnover or £50k.
The loans is applied to via a standardised online application. The loan should reach businesses within days, providing rapid support to those that need it as easily as possible.
The scheme launched on Monday 4 May, and firms are able to access these loans through a network of accredited lenders. Businesses can not to apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (“CBILS”).
The government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and agree a low standardised level of interest for the remaining period of the loan. Some of those accredited for CBILS will not be participating in this new scheme due to the low lending ceiling.
Our understanding is that there will be no viability test, though some fraud checks would have to be completed. There is no limit on a firm’s turnover and firms do not need to show proof of turnover (only self-certify), but it is expected that only smaller firms will apply because of the limit on funds.
You can apply for a loan if your business:
- Is based in the UK
- Has been negatively affected by coronavirus (only need to self-certify negative impact)
- Wasn’t an ‘undertaking in difficulty’ on 31 December 2019
- Have not already claimed under CBILS (unless it is agreed with your lender to transfer the existing loan into the Bounce Back scheme)
The following businesses aren’t 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 are unsure about what Government support package is available to your business, we are here to help. We have created a simple toolkit that cuts through the noise and makes you aware of exactly what help is available to you. It takes a few minutes to fill out and you can find it on our COVID-19 Information hub.