Bounce Back into Business
Last week the government announced a further loan scheme designed to enable businesses to access finance more quickly during the coronavirus outbreak. The Bounce Back Loan Scheme (BBLS) gives the lender a 100% government-backed guarantee against the outstanding balance of the facility (both capital and interest).
About The Scheme
The Bounce Back Loan Scheme (BBLS) provides financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak and that can benefit from between £2,000 and £50,000 in finance (the maximum amount will be 25% of turnover) from accredited lenders. The length of the loan is six years, but early repayment is allowed, without early repayment fees. Applying for the scheme takes minutes and is simple to navigate.
How do I know if my business qualifies for the Bounce Back Loan Scheme?
Businesses from all sectors can apply for a facility. The business must self-certify to its lender the following:
- Confirm it is UK-based in its business activity, and established by 1 March 2020
- Confirm it has been adversely impacted by the Coronavirus
- Confirm it is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility)
- Confirm it is not in bankruptcy, liquidation or undergoing debt restructuring
However, the following businesses are not eligible to apply:
- Banks, insurers and reinsurers
- Public sector bodies
- State-funded schools
You also cannot apply if you are already claiming under the Coronavirus Business Interuption Loan Scheme (CBILS). However, if you have already received a loan up to £50,000 under CBILS and want to transfer if to the Bounce Back Loan Scheme, you can arrange this with your lender until the 4th November 2020.
Risk
Despite the borrower not needing to make any repayments for the first 12 months there are risks presented to a business whilst trying to financially recover from the effects of coronavirus as the business is getting itself into debt repayments. However, the interest rate for the facility is set at 2.5% per annum, meaning businesses will all benefit from the same, affordable rate of interest.
Please note, like the CBILS scheme, the borrower always remains liable for the debt.
Final Thoughts
The new bounce-back scheme offers real hope in this space. So far, the initial response has been enthusiastic which should offer a lifeline to many small businesses and sole traders under pressure. Although, government legislation is subject to change without notice and depends on individual circumstance.
We will provide you with a series of options relevant to you and your business. If you would like further information, please call our offices on 0113 266 0735.