The government has announced a new loan scheme which aims to help smaller businesses access loan finance through a 100% government guarantee for loans of up to £50,000.
Under the Bounce Back Loans Scheme (BBLS), businesses will be able to borrow between £2,000 and £50,000 through a network of accredited lenders approved by the British Business Bank.
Businesses will be able to apply for a Bounce Back Loan through a short, standardised online application, with loans due to reach businesses within days of an application being successful.
The scheme is expected to be launched on 4 May 2020.
Loan terms will be for terms of up to 6 years.
No repayments will be due during the first 12 months.
The government will provide lenders with a 100% guarantee for the loan, as well as paying any fees and interest for the first 12 months.
The government will work with lenders to agree a low rate of interest for the remaining period of the loan.
To be eligible for the scheme, a business must:
- be based in the UK
- have been negatively affected by coronavirus
- not have been an ‘undertaking in difficulty’ on 31 December 2019
Businesses in the following sectors will not be eligible:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
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.
Full details of the scheme are yet to be published.