Bounce Back Loans Scheme – 100% Government Backed

Yesterday (27th April 2020) the Chancellor of the Exchequer announced the Government’s Bounce Back Loans scheme with a higher than expected limit of £50,000.

The Government says the new scheme will open Monday 4th May 2020 and will see successful applicants receiving cash within 24 hours.

Rishi Sunak said, “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.”

The British Business Bank will administer the Bounce Bank Loans (just as it is administering the Coronavirus Business Loan Interruption Scheme or CBILS) which will be offered by the same 50 banks currently taking part in CBILS.

To ensure banks do actually make the loans, the Government will cover 100 per cent of lenders’ losses in the event that a borrower defaults.

SUMMARY OF THE SCHEME:

  • The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and £50,000.
  • The Government will guarantee 100% of the loan.
  • There will be NO fees or interest to pay for the first 12 months.
  • 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.

WHO IS ELIGIBLE?

According to Gov.uk 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

You cannot apply if you’re already claiming under 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 will be able to arrange this with your lender until 4 November 2020.

HOW TO ACCESS THE SCHEME:

The Bounce Back Loan scheme will launch on 4 May 2020. You cannot do anything until that time.

Businesses will apparently be able to apply for the loan online via a simple form. Our understanding is that applicants will not face a viability test – but some fraud checks will have to be completed.

MORE INFORMATION:

At the time of writing we await publication of the Government’s detailed guidance on the scheme.

 

Written 27.04.2020 by

Antony Holdsworth BSc (Hons) FCMA CGMA

Owner of

E. H. Taylors

Antony J. Holdsworth & Co

Clarence Trustees LLP

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