The Bounce Back Loan scheme will help small businesses to borrow between £2,000 and £50,000 and access the cash within days.
The Bounce Back Loan scheme launched today, Monday 4 May 2020.
Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders.
There won’t be any fees or interest to pay for the first 12 months.
Loan terms will be up to 6 years. No loan repayments will be due during the first 12 months. The government have agreed an interest rate of 2.5% with lenders for the remaining period of the loan.
‘This is welcome news for our clients and small businesses, enabling thousands of businesses access to cash they desperately need to keep themselves going through this crisis.’
‘Sole traders, small limited companies, entrepreneurs and those who have struggled to get a CBILS loan, will have access to finance within days, without unnecessary red tape or time-consuming application processes.’
Key features of the scheme
- Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
- Up to six years loan term: The loan term is six years, but you can pay back the loan sooner with no early repayment charge.
- Repayments: There won’t be any fees or interest to pay for the first 12 months.
- 100% Government backed: The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
- Interest rate: The government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest.
- Fees: There are no set up or application fees.
- How do I apply: Please click here for a list of current providers.
- How long will it take for me to receive the loan: In most cases the money will arrive in your bank account within 1-2 business days, once the loan has been approved.
- Repayments: You can pay back the loan at any time, with no early repayment fees.
- No personal guarantees: Lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).
- What period is considered for turnover: The lenders will consider the 2019 calendar year. If your business was established after 1 January 2019, you should apply the 25% to your estimated annual turnover from the date you started your business.
- What if I already have a Coronavirus Business Interruption Loan (CBIL): You may be able to apply to refinance your existing CBIL.
- The borrower always remains 100% liable for the debt.
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days.
The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days providing immediate support to those that need it as easily as possible.
The scheme will be delivered through a network of accredited lenders. Please click here for a list of providers.
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
- Engaged in trading or commercial activity in the UK and was established by 1 March 2020
- Is not in liquidation, going through debt restructuring at the time of application or is in bankruptcy
- 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
Who cannot apply
The following businesses are not eligible to apply:
- Credit institutions
- Insurance companies (but not insurance brokers)
- public-sector bodies
- further-education establishments, if they are grant-funded
- state-funded primary and secondary schools
If you’re already claiming funding
You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).
If you’ve already received a loan of up to £50,000 under BILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.
Please feel free to contact one of our team if you have any questions.
FAQs for small businesses
Please click here for answers to the most frequently asked questions.