Bounce Back Loans - an additional loan scheme launched by the Government to support small businesses
As the Covid-19 crisis continues we are all very much aware of the pressures that UK business face as they work through these unprecedented times. The Government has announced an unprecedented support package for UK business to help them tackle this crisis. They have this week announced an additional scheme for small businesses – Bounce Back Loans.
Bounce Back Loans are a new small business loan scheme that is 100% government backed. It is designed to be a fast track scheme to make it easier for small businesses to access the cash that they need quickly.
The key features include:
- Businesses can borrow between £2,000 and £50,000
- The maximum that can be borrowed is 25% of the sales of the business (presumably before COVID-19 disrupted sales)
- Loans will be interest free for the first 12 months, with a "low standardised" rate of interest for the remainder of the loan
- No repayments will be due for the first 12 months
- Loans terms will be up to 6 years.
- Applications can be made online through a short and simple form
- The loans will still be accessed through accredited funders not directly from the Government
- We are told that cash should reach businesses applying for loans within days
- The scheme will be launched for applications on 4th May
- If you have already obtained a CBILS loan you cannot also apply for a Bounce Back Loan although we believe you can switch to a Bounce Back Loan
More information can be found here: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan
Over recent weeks there has been an unprecedented amount of support made available from the Government including many Government backed loans and grants. Working through the support that is available and understanding if you can benefit or indeed are eligible is time consuming and hard work. A recent review found that the success rate for businesses using third party professionals such as advisers, brokers, and accountants has a 30% higher chance of achieving a successful application for the loans on offer. Something worthy of consideration if you are thinking of applying.
The amount of support being made available is startling and is a sign of the concern that the Government has about the impact on the UK economy. Despite this unprecedented level of support, UK businesses need to be aware of all the options open to them. Taking out interest free loans have their place but there are financial solutions that can support business without taking on long term debt. You may also benefit from talking to your current funders or financial advisors about the finance solutions that exist to support your business cashflow.