COVID-19 | The new Bounce Back Loan Scheme
The Bounce Back Loan is a 100% government backed loan scheme for small businesses, designed to offer up to £50,000 of fast access finance for those affected by coronavirus.
Details of the scheme
- The loans will enable businesses to borrow between £2000 and £50,000 and it’s been promised that the cash will be available within a few days.
- The amount that can be borrowed is dependent on turnover and is a maximum of 25% of turnover.
- These loans will be interest free for the first 12 months and applications have been designed to be as simple as possible through a standard application form.
- Unlike other loans and funding measures announced by the Government, there are no future business viability tests or eligibility criteria.
- Companies are not required to make repayments for the first 12 months.
- The interest rate has been set at 2.5% per annum for the life of the loan which is up to six years.
- Early repayments can be made without any penalties.
- There is no charge to access the scheme.
The loan is a welcome addition of assistance for small businesses which make up the backbone of the UK’s economy and is an option for businesses that do not qualify for the CBILS – Coronavirus Business Interruption Scheme, to get access to finance quickly to help them through.
Applications to the loan scheme will be available from Monday 4 May and as with the other loans already announced, will be delivered through a network of approved lenders.
Speed seems to be key watch word with this new scheme, as delivery so far has been slower than businesses have needed through other schemes. The CBILS scheme in particular has been criticised for having a slow start, although the pace of these loans now reaching businesses does appear to be improving.
On paper this scheme does seem to meet a need for simple fast access to money to businesses but the proof will be in how the banks respond to what is likely to be huge demand.
Is this scheme right for you?
There is a package of measures available to businesses to help them through this current crisis, some new and some already in existence. Each scheme has its advantages and key differences but what is the same is the need to repay the money. Before you take the step it’s key you understand what you are signing up to.
If you would like advice or guidance on any legal or commercial matter, a member of our team can walk you through everything. Click here to discuss.
For more general business advice in relation to coronavirus visit our dedicated resource hub.
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