The Bounce Back Loan Scheme (BBLS), a further emergency measure introduced by the government to assist SMEs through coronavirus, has launched today – 4 May 2020.
The new scheme will offer smaller amounts than the existing Coronavirus Business Interruption Loan Scheme (CBILS), and according to the Treasury, will be quicker and easier to apply for.
The Bounce Back Loan scheme aims to help small and medium-sized businesses to borrow between £2,000 and £50,000, depending on their business’ turnover.
The government is to provide guarantees on 100% of the loan, unlike CBILS which only has a government backed guarantee of 80%. The government will also make a ‘Business Interruption Payment (BIP) to cover the cost of fees and interest for the first year, and during the first 12 months businesses will not have to make any loan repayments. All lenders will charge a flat rate of 2.5% and the loans will last up to six years.
Under the scheme, lenders are not permitted to take any form of personal guarantee or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).
Whilst the facility amounts are aimed at smaller businesses, there is no limit on the size of businesses that can apply. Sole traders and limited companies affected by the coronavirus lockdown may apply.
Applicants can apply if their business:
- is based in the UK;
- has been negatively affected by coronavirus; and
- was not an ‘undertaking in difficulty’ on 31 December 2019.
The full eligibility criteria is available on the British Business Bank's Website
Business should apply through the bank with which they have a business account.
In order to apply, borrowers are required to answer a short application form comprising only seven questions, including information about turnover and tax details. If successful, the Treasury says funds should then be available "within days".
You cannot apply for a Bounce Back Loan if you are already claiming funding under CBILS. However, borrowers are able to switch on-going CBILS applications to a bounce back loan, if it was under £50,000. Businesses which have already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme can arrange this with their lender until 4 November 2020.
Please do not hesitate to contact us if we can assist with any queries or application paperwork. Our Banking & Finance Team is on hand to advise in relation to the legal aspects of the standard application documents.
Please see our related articles on the other government schemes available to assist businesses during COVID-19:
UPDATED: COVID-19: Understanding how the business interruption loan scheme can help your organisation).
COVID-19: Coronavirus Large Business Interruption Loan Scheme (CLBILS)
COVID-19: Understanding how the COVID Corporate Financing Facility (CCFF) can help your organisation)