• Nicola Curson

Bounce Back Loans Scheme Launched for Small and Medium Businesses

On Monday the Government introduced new coronavirus support for small and medium businesses via the Bounce Back Loan Scheme (BBLS).

What is it?

A business loan designed to help small and medium-sized businesses affected by coronavirus.

Small businesses can quickly access loans between £2,000 and £50,000.  Successful applications should be paid within days of submission.

The main features of the loan are:

  • 100% guaranteed by government  - no credit checks will be carried out.

  • There will be no repayments, interest or fees for the first 12 months.

  • Interest will be low, capped at 2.5% for the life of the loan.

  • Loan terms will be up to 6 years. 

  • The scheme is being delivered via a network of approved lenders, including most high street banks.

  • Borrow up to 25% of turnover.

  • Early repayment without penalty may be available, but this will depend on the lender.

Can I get it?

You must be able to declare that your business:

  • Has been negatively affected by Coronavirus

  • Was not a ‘business in difficulty’ at 31 December 2019

  • Is engaged in trading or commercial activity in the UK and was established by 1st March 2020

The scheme is open to sole traders, partnerships and limited companies.

You cannot apply if you’re already claiming for funding (loan) under the Coronavirus Business Interruption Loan Scheme (CBILS).

How do I apply?

Detailed information on how to apply can be found on the British Business Bank website here - https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/

Most high street banks are offering bounce back loans to business customers.  You should approach your own bank in the first instance, and most lenders are asking that you apply via their website.

You will need to fill in a short application online, which self-certifies that your business is eligible for a loan.  You’ll need your turnover (sales) figure.  The bank will specify the period of the turnover, ie 2019 calendar year or last year’s accounts etc.  The value of the loan cannot exceed 25% of the value of your turnover.

Once you’ve submitted your return, the bank will carry out Anti-Money Laundering checks.  The bank should contact you within 24-48 hours, to confirm if your application was successful.

If you are not successful, you can still approach other lenders within the scheme.

When do I receive my loan?

It depends on each bank, but loans should reach approved customers within days.  We are aware of businesses that applied on Monday morning, that have received funds today.

Is a Bounce Back Loan Right for Me?

Although part of the government’s coronavirus funding package, a Bounce Back Loan isn’t a grant.  It’s a loan which needs to be re-paid. 

At this time of uncertainty, each business needs to carefully consider if taking on debt is the correct thing for them.  Loan repayments will commence next May/June, so you need to consider if your business will have sufficient cash flow to meet those future repayments.