Background
The new Bounce Bank Loan Scheme is available to provide financial support to UK businesses that have been disrupted by the Coronavirus (COVID-19) outbreak, and eligible businesses can benefit from loans of up to £50,000.
The government will guarantee 100% of the loan, with no fees or interest payable for the first 12 months. The scheme has now been officially launched and small and medium-sized businesses can apply for a loan under the scheme from today, 4 May 2020.
Detail
The Bounce Back Loan Scheme (BBLS) is available to eligible small and medium-sized businesses through a number of British Business Bank accredited lenders across the UK.
Eligibilty for the scheme:
The main conditions for a business to be able to apply for a loan under the BBLS are as follows:
- They are based in the UK;
- The business has been negatively affected by the coronavirus (COVID-19) outbreak;
- The business was not in ‘difficulty’ on 31 December 2019;
- The business must derive more than 50% of its income from its trading activity (not applicable to charities).
A business cannot use the BBLS if they have already made a claim under the Coronavirus Business Interruption Loan Scheme (CBILS). However, if a loan of up to £50,000 has been received under the CBILS then it is possible to arrange with the lender to transfer that loan into the BBLS. The transfer must be agreed before 4 November 2020.
Bounce Back Loans are available to small and medium sized businesses in all sectors, except for:
- Banks, insurers and reinsurers (but not insurance brokers);
- Public-sector bodies;
- State funded primary and secondary schools.
Key features of the loan:
- Loans range from £2,000 up to 25% of business turnover, with the maximum available loan being £50,000;
- Whilst the borrower is fully liable for the loan, under the scheme the government will provide a 100% guarantee against both the capital and interest;
- The Government will make a Business Interruption Payment (BIP) to cover the interest and any fees for the first 12 months. The borrower does not have to make any repayments for the first 12 months;
- Interest rate of 2.5% per annum for all businesses;
- Loan terms of up to 6 years and no charges for early repayment;
- 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);
- If one lender turns you down, you can still approach other lenders under the scheme.
The BBLS is intended to be fast for lenders to process and quick and easy for businesses to access, with only a short application form to be completed online. The guidance recommends that a business approaches its own lender in the first instance, ideally via its website.
This is only an outline of the Bounce Back Loan Scheme and further details on how to apply for a loan can be found at https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/.
Our office premises remain closed however our staff are working from home as much as possible and are contactable either by e-mail or by calling the normal office number.
Should you have any concerns regarding cash flow or any other query relating to finances in the current situation, please speak to your usual contact at the firm.
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