What is the Bounce Back Loan Scheme?
Definition of Bounce Back Loan Scheme
The Bounce Back Loan Scheme is an initiative introduced by the government to help small and medium-sized businesses affected by the coronavirus crisis to secure loans of up to £50,000.
The minimum amount that a business can apply for is £2,000 and the loan term will be 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.
Unlike the Coronavirus Business Interruption Loan Scheme (CBILS), in which only 80% of loans are guaranteed by the government, loans secured through the Bounce Back Loan Scheme come with a 100% guarantee from the government.
Who can access the scheme?
You can 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 can’t apply for a loan through the Bounce Back Loan Scheme but you may be able to transfer your existing CBILS loan to the Bounce Back Loan Scheme through your lender.
How can businesses access the Bounce Back Loan Scheme?
The scheme launched on 4th May 2020 and the deadline to apply is 31st March 2021. Further information about how to apply is available on the government’s website.
Pay as You Grow
In September 2020 the Chancellor announced that Business owners who took out a loan through the Bounce Back Loan Scheme will be offered flexibility through a new government repayment system. ‘Pay as You Grow’ will give borrowers the opportunity to extend the length of their loan period from six years to ten in order to reduce their monthly repayments. The system will also introduce the options of interest-only periods of six months and payment holidays for borrowers.