Bounce Back Loans have been implemented after strong criticism from firms of the Government’s Coronavirus Business Interruption Loan Scheme aimed at small and medium-sized businesses. Express.co.uk has compiled advice about how these bounce back loans work, who can apply for them and what the terms are.
What is a Bounce Back Loan?
Applications for Bounce Back Loans opened on Monday morning in a bid to help small businesses navigate the financial hardships of the coronavirus pandemic.
The Treasury-backed scheme offers loans through banks of up to £50,000.
Final details of the loan scheme were settled upon over the weekend and lenders are expected to be flooded with applications this week.
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Who can apply for a Bounce Back Loan?
Companies of any size can apply for a Bounce Back Loan, but the scheme is intended to help small businesses with less than 10 employees.
The loans on offer range from £2,000 to £50,000.
You can apply for a loan if your business:
- Is based int he UK
- Has been negatively hit by the coronavirus crisis
- Was not “undertaking difficulty” on December 31, 2019.
Most businesses are eligible to apply for a Bounce Back Loan, however, the following are ineligible:
- Banks, insurers and reinsurers, excluding insurance brokers
- Public-sector bodies
- State-funded primary and secondary schools.
Anyone who has already claimed money under the Coronavirus Business Interruption Loan Scheme (CBILS) is also not permitted to apply.
However, those who have received a loan up to £50,000 from the CBILS can arrange to do so with their lender until November 4, 2020.
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When will the money be made available?
Businesses should apply through the bank with which they have a business account.
Although they do not have to arrange the Bounce Back Loan with their existing lender if they do not wish to do so.
The Treasury says funds should then be available “within days”.
What are the terms and conditions for the Bounce Back Loans?
The Bounce Back Loan scheme is intended to help small and medium-sized businesses allowing them to borrow between £2,000 and £50,000.
The Government will guarantee 100 percent of the loan and there will not be any fees or interest to pay on these loans for the first 12 months.
Loan terms will be up to six years, but no repayments will be due during the first 12 months.
All lenders will charge a flat rate of 2.5 percent.
How to apply for a Bounce Back Loan
The Bounce Back Loan scheme is due to launch on May 4 at 9am.
The same 50-plus lenders accredited by the British Business Bank, the state-owned financial institution, to provide the CBILS are also expected to offer bounce back loans.
You can find information about these loans here.
Companies will have to fill out a simple online form within which they will be asked for details such as annual turnover, bank account number, amount of credit sought and whether the business has bee adversely hit by the COVID-19 crisis.
You are not compelled to offer security or personal guarantees, nor do applicants need to stay with their existing lenders.
You can apply for a Bounce Back Loan here.
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