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COVID19: New Bounce Back Loan Scheme – 100% government backed loan scheme for small business

Updated 29 April 2020: Following Monday’s announcement by Rishi Sunak, (27 April 2020) small businesses will benefit from the new fast-track Bounce Back loan finance scheme. The aim to provide loans with a 100% government-backed guarantee for lenders. If you are a smaller company who struggled to get a CBILS loan then this could be for you.

Covid19 Bounce Back Loan Scheme

  • businesses will be able to borrow between £2,000 and £50,000
  • cash should be made available within days
  • loans will be interest free for the first 12 months
  • businesses can apply online through a short and simple form
  • a low standardised level of interest for the remaining period of the loan

The Bounce Back Loans scheme will provide loans of up to £50,000 available to the smallest businesses affected by the coronavirus pandemic.

The government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.

Bounce Back Loan Terms and Interest Rates

Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan – more details to be published by Gov.UK soon.

How do I apply for a Bounce Back Loan?

The loans will be easy to apply for through a short, online application. The Government are suggesting that the loan should reach your business within days.

Am I eligible for the Bounce Back Loan?

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

Who cannot apply

The following businesses are not eligible to apply:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • 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 CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

When can I apply for a Bounce Back Loan?

The scheme will launch for applications on Monday 4 May. You will be able to access these loans through a network of accredited lenders.

The government are working with lenders to ensure loans delivered through this scheme are dealt with as quickly as possible and agree a low standardised level of interest for the remaining period of the loan.

More information about the Bounce Back Loan scheme will be available shortly.

Are you taking advantage of the latest Covid19 Support Schemes, estimated to be worth over £15 billion for business

  • job retention scheme – more than 500,000 claims have been made to the value of £4.5 billion
  • business grants – half a million business properties have benefited from £6 billion of business grants
  • Coronavirus Business Interruption Loan Scheme – with over 20,000 loans
  • Covid Corporate Financing Facility, which has provided over £14 billion for larger firms
  • VAT deferrals worth billions of pounds
  • scrapped businesses rates
  • covering the cost of statutory sick pay
  • the new scheme will run alongside the existing Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS)
  • The Government are also taking additional steps on the Coronavirus Business Interruption Loan Scheme (CBILS) to ensure that lenders have the confidence they need to process finance applications quickly, including removing the per lender portfolio cap for the government guarantee, and changing the viability tests that so that all banks will need to assess is whether a business was viable pre COVID19

We hope this information helps you and we are here for you during this difficult time. We will continue to keep you updated as the Government releases new information. Our business contingency plan is in place and we will do everything we can to support our clients during this uncertain period, please do not hesitate to contact us here if you have any concerns or queries.

Visit our COVID19 Business Hub for more information

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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above

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