As part of Rishi Sunak’s promise to make loan funds accessible to struggling businesses, the Bounce Back Loan Scheme was introduced by the government on Monday 27 April. The scheme launches on 4 May 2020.
This scheme offers loan funds of £2,000 to £50,000 over periods up to 6 years. These loans will cover 25 per cent of a business’ turnover, up to the £50,000.
For the first 12 months of the loan there is:
• no interest on loan funds
• no fee charged
• no repayment necessary
The loan is also 100% government backed, unlike the other loan schemes available, which should make it more accessible.
It is being promoted as an easy and fast cash-flow solution, with a short standardised online application and a fast-track of loan funds within 48 hours of approval to the applicant.
The government has advised that they will be working with lenders to agree a low standardised level of interest for the remaining period of the loan.
To be eligible your business must:
• be UK based
• be negatively affected by Coronavirus
• not have been in financial difficulty at 31 December 2019
The following businesses are ineligible:
• Banks, insurers and reinsurers (not including insurance brokers)
• Public-sector bodies
• State-funded primary and secondary schools
If you have already applied for a Coronavirus Business Interruption Loan Scheme (CBILS) loan and intend to maintain that, you will not be eligible for the Bounce Back Loan Scheme. However, you can transfer a CBILS loan to a Bounce Back Loan with your lender at any point until 4 November 2020.