C19 Business News Update: Government Announces “Bounce Back” Loans

The Government has announced a new 100% Government backed loan scheme for small businesses.

Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders, the Chancellor announced.

Rishi Sunak said the new Bounce Back Loans scheme, which provides loans of up to £50,000, would help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.

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.
Loan terms will be up to 6 years.
No repayments will be due during the first 12 months.

The scheme was launched for applications on Monday 4 May. Businesses are be able to access these loans through a network of accredited lenders.

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 set at 2.5% for the remaining period of the loan:

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 Play

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 are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

Business Bounce Back Loan – Frequently Asked Questions (FAQ’s)

The British Business Bank has released a FAQs for Small Businesses: Bounce Back Loan Scheme covering 24 questions.

See: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/faqs-for-small-businesses/#f1

Apply For A Business Bounce Back Loan (BBBL)

The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000.

The scheme is being delivered through a network of accredited lenders.

Guidance on how to apply is given on the British Business Bank Website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/

Actions required:

Find an accredited lender – there is a link on the above page;
Approach them, ideally via their website;
Complete a short application form which self certifies that your business is eligible for a loan under BBLS;
If eligible you will need to complete the Banks Anti-Money laundering, fraud and Know Your Client checks;
The lender makes a decision.

Talk to us if you need assistance in applying for a BBBL we will do our best to help.

Who is eligible:

Your business must be able to self‑declare to the lender that it:

has been impacted by the coronavirus (COVID-19) pandemic
was not a business in difficulty at 31 December 2019 (if it was, you must confirm your business complies with additional state aid restrictions under de minimis state aid rules)
is engaged in trading or commercial activity in the UK and was established by 1 March 2020
is not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF), unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility
is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance
derives more than 50% of its income from its trading activity (this requirement does not apply to charities or further-education colleges)
is not in a restricted sector (see below)

Note: The above is not an exhaustive list – see The British Business Bank for more information.

Bounce Back Loans are available to businesses in all sectors, except the following: