Bounce Back Loan Scheme announced for small businesses
The government has announced the Bounce Back Loan Scheme, a new addition to its package of financial measures to support businesses during the coronavirus crisis. Here’s what we know about the scheme so far.
How the scheme will work
The Bounce Back Loan Scheme is designed for small and medium-sized businesses and will allow qualifying businesses to apply for loans from £2,000 to £50,000 for a loan term of up to six years. Businesses won’t have to make any repayments or pay interest or fees during the first 12 months of the loan.
The scheme - announced by Chancellor Rishi Sunak yesterday - will provide businesses with an alternative source of funding to the Coronavirus Business Interruption Loan Scheme (CBILS), which was announced last month.
The government only guarantees 80% of each loan paid out through the Coronavirus Business Interruption Scheme (CBILS), which makes lenders partially liable for any losses and means that credit checks and other formalities have to be completed before funding can be provided.
Bounce Back Loan Scheme loans, on the other hand, will be 100% guaranteed by the government. The Chancellor has called the Bounce Back Loan Scheme a “simple, quick, easy solution” for businesses seeking a loan during the coronavirus crisis.
Applying for the scheme
You will be able to apply for a loan through the Bounce Back Loan Scheme if your business is based in the UK, has been negatively affected by coronavirus and was not ‘an undertaking in difficulty’ on 31st December 2019.
If you’re already receiving funding through CBILS, you won’t be able to apply for a loan through the Bounce Back Loan Scheme. However, the government has said that you can transfer a CBILS loan of up to £50,000 to the new scheme before 4th November 2020 if you arrange this with your lender.
The Bounce Back Loan Scheme will launch on 4th May 2020 and the government will provide further details about the application process on its website.
To learn more about what the coronavirus crisis could mean for your business and to stay up to date with the latest news, take a look at our small business coronavirus hub.