Bounce Back Loan Scheme goes live

5 May 2020

calculator and paperwork

Following on from the Chancellor of the Exchequer’s announcement on 27 April, the Bounce Back Loan Scheme (BBLS) has opened for applications from Monday 4 May.

The BBLS is targeted towards the UK’s small and micro businesses and will provide 100% government-guaranteed loans from £2,000 to £50,000, subject to a cap of 25% of the business’ turnover.

The scheme will be operated through a network of accredited lenders approved by the British Business Bank and businesses will be able to apply through a short, standardised online application.

Providing lenders with a 100% government-backed guarantee and standardising the application form is expected to lead to a faster process with many loans becoming available within days.

Terms

Loans will be for terms of 6 years, although early repayment is permitted without any early repayment fees.

No repayments will be due during the first 12 months. Thereafter, capital will be repaid on a straight-line basis.

The government has set the interest rate for this facility at 2.5% per annum and will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.

The government will provide lenders with a 100% guarantee for the loan.

No guarantee fee is payable for businesses or lenders to access the scheme.

No personal guarantees are allowed and no recovery action can be taken over a principal private residence or principal private vehicle.

Eligibility

Companies of any size can apply, although the scheme is aimed at small businesses with fewer than 10 employees and at the UK’s 900,000 sole traders.

To be eligible for the scheme, the business must self-certify to its lender that it:

  • is UK-based in its business activity and was established before 1 March 2020;
  • has been adversely impacted by Coronavirus (Covid-19);
  • is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility); and
  • is not in bankruptcy, liquidation or undergoing debt restructuring.

Businesses in the following sectors are not eligible to apply:

  • credit institutions (falling within the remit of the Bank Recovery and Resolution Directive);
  • public sector bodies;
  • state -funded primary or secondary schools; and
  • insurance companies.

A business is not eligible to apply if already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). However, if the business has already received a loan of up to £50,000 under CBILS, it may transfer it into the Bounce Back Loan scheme until 4 November 2020.

How to apply

A list of accredited lenders providing Bounce Back Loans is available on the British Business Bank website.

Businesses will be required to fill in a short online application form on the lender’s website, which self-certifies whether they are eligible for a Bounce Back Loan facility.

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