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Small business Bounce Back Loans: How to access the £50,000 scheme

The government has announced a number of loan schemes to support businesses during these challenging times, most notably the Coronavirus Business Interruption Loan Scheme.

However, on 28 April, amidst criticism that small businesses weren’t able to access funding fast enough, Rishi Sunak announced an additional loan offering – coined Bounce Back Loans.

The support package is aimed at the UK’s smaller businesses, and offers 12 months interest-free loans of up to £50,000 with a 100% guarantee. 

Despite criticism around fraudulent applications, following the announcement of a second lockdown in November, the deadline to apply for a BBLS loan has been extended. 

Here’s everything you need to know about the scheme.

How does the Bounce Back Loans scheme work?

  • Like the CBILS scheme, Bounce Back Loans are delivered via the British Business Bank and a selection of its approved lenders. There are now over 70 lenders in the CBILS scheme, including some alternative finance lenders such as Funding Circle and Starling Bank. The list of BBILS current lenders can be found here, there aren’t as many as for CBILS but there is a range of traditional and alternative lenders.
  • Loan size ranges from £2,000 up to a maximum of £50,000 (although the amount is capped at 25% of your total turnover (usually for calendar year 2019, or new businesses can estimate). The borrowing terms are now up to 10 years. This has been extended from six years initially.
  • The first 12-months are interest-free, and crucially for cash-strapped small firms there are no repayments due in the first year either.
  • Interest rates are set at 2.5% after the interest-free period ends. (This is much lower and therefore cheaper than a typical loan).
  • There is no fee to enter the scheme and you will not need to provide a personal guarantee.
  • NEW: You can now ‘top up’ your BBLS (if you didn’t borrow the maximum amount initially). This is a new part of the scheme that comes into play from the 9 November. You can only top up once.
  • You can repay the loan early with no penalties or fees.

How long is the Bounce Back Loans scheme running for?

The scheme went live on Monday 4 May. Initially it was due to finish on the 30 November but the deadline for applications has now been extended to the 31 January 2021.

Who is eligible for the loan?

The scheme is aimed at the UK’s 5.6 million micro businesses, with businesses able to claim up to 25% of turnover, capped at £50,000.

You will also need to have evidence that your business was not an “undertaking in difficulty” as of December 31 2019.

Businesses must be UK-based and have been negatively impacted by coronavirus. Banks, insurers and reinsurers, public-sector bodies and state-funded schools are not eligible for the scheme.

Your business must have started before March 2020. 

You need to be a business but you don’t have to have a business bank account.

What is the application process be like?

One of the key differentiators of this scheme (compared to CBILS) is that it will require just a simple two-page application form. You do not need to provide detailed business plans or forward financials – and can self-certify all details.

Funds can be available within just 24 hours.

What does the 100% government guarantee mean?

It’s important to note that even with a 100% government-guarantee, it is still you, the borrower, who is fully responsible for paying back the loan.

The guarantee is to protect the lenders if you did end up defaulting, meaning they will cover 100% of the losses for the lender if that was the case.

The idea is that by modifying the risk to lenders they will be more likely to deliver finance to businesses in need.

Can you apply for a Bounce Back Loan if you’ve already applied for CBILS?

No, you are excluded from applying for a Bounce Back Loan if you’ve already applied for a Coronavirus Business Interruption Loan.

However, if you’ve already received a loan under the CBILS scheme (of up to £50,000) and would like to transfer it to the Bounce Back scheme, you can arrange this with your lender. 

How much can I borrow?

The loan is capped at £50,000.

How do I apply for a Bounce Back Loan?

You can find out more about how to apply on the gov site here

Want to look at all of your funding options? Get personalised, pre-qualified offers for your business today in just 30 seconds. Simply enter your company name below.

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