Coronavirus Bounce Back Loan Scheme – guide to the scheme and making a claim
The Bounce Back Loan Scheme (BBLS) has been designed to provide financial support to businesses across the UK that are losing revenue, and seeing their cash flow disrupted, as a result of the COVID-19 outbreak. BBLS allows to get access to funding quickly.
The Government will provide banks with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. Repayments will not have to be made by businesses during the first 12 months. The online application process is very straightforward and effortless. Therefore, with a very attractive interest rate of 2.5%, these loans have been attracting a lot of interest from businesses struggling with their cash flow during these difficult times. Treasury data as of 24 May showed more than 650,000 businesses have accessed coronavirus-linked finance schemes, amounting to £27.5bn.
Affordability will not be assessed by banks. Also, it is important to note that the loans will not be subject to many of the usual consumer protections that apply to business lending, while borrowers will not have the benefit of protection and remedies that would otherwise be available under the Consumer Credit Act.
Key points of the Bounce Back Loan Scheme
- Loans range from £2,000 up to 25% of a business’ turnover, with the maximum loan’s amount of £50,000.
- The borrower does not have to make any repayments for the first 12 months.
- The length of the loan is six years, however early repayment is allowed without early repayment fees.
- The scheme provides the lender with a full (100%) Government-backed guarantee against the outstanding balance of the finance.
- The borrower remains 100% liable for the debt.
- The Government will make a Business Interruption Payment (BIP) to cover the first 12 months of interest payments.
- The interest rate for the facility is set at 2.5% per annum.
- You will not be eligible for a BBLS loan if you have already obtained a loan through the Coronavirus Business Interruption Loan Scheme, unless that loan will be refinanced in full by the Bounce Back Loan Scheme.
- Lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as personal vehicle or their main home).
Is my business eligible for a Bounce Back Loan?
To be eligible the business must be able to self-declare to the lender that it:
- has been impacted by the coronavirus pandemic
- is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance
- was not a business in difficulty at 31st December 2019
- is engaged in trading or commercial activity in the UK and was established by 1st 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
- 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 here)
How to apply
The British Business Bank advise that in the first instance you should approach your own bank. You may also consider approaching other lenders if you are unable to access the finance you require. Details of accredited lenders can be found here.
Details of how to apply may be accessed here.