The new Bounce Back Loan Scheme (BBLS) offers financial support to smaller businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak. 

The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000. The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The low interest rate for the facility is set by government, meaning businesses will all benefit from the same, affordable rate of interest.

The scheme will be delivered through a network of accredited lenders and administered by the British Business Bank.

Chris Wallace, Managing Director of Visionary Accountants in St Albans and Welwyn Garden City, said: "The SME clients we work with in St Albans, Wewyn Garden City, Hemel Hempstead and the surrounding Hertfordshire area are now reaching a point where addtional support is required. Furloughing staff and cutting costs becomes less viable the longer businesses are locked down. The Bounce Back Loan Scheme is a welcome addition to the Coronavirus Business Interruption Loan Scheme which has proved difficult for our clients to access. Although the BBLS is capped at £50,000 we hope it will make a difference to numerous smaller businesses and in a much shorter space of time." 

About the scheme

How it works

BBLS is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website.

A lender can provide a six-year term loan from £2,000 up to 25% of a business’ turnover. The maximum loan amount is £50,000. The maximum interest rate is 2.5% per annum.

The scheme gives the lender a full (100%) government-backed guarantee against the outstanding balance of the facility (both capital and interest). 

The borrower always remains fully liable for the debt.

First approach a lender

You should approach a lender yourself, ideally via its website.

In the first instance, you should approach your own provider. You may also consider approaching other lenders if you are unable to access the finance you require.

You will need to fill in a short application form online, which self-certifies that your business is eligible for a loan under BBLS.

If your business is eligible, it will be subject to appropriate customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Some state aid restrictions may apply to your application.

Note: There is high demand for finance through BBLS. Phone lines are likely to be busy and branches may not be able to handle enquiries in person.

The lender then makes a decision

The lender has the authority to decide whether to offer you finance.

Under the scheme, lenders are not permitted to:

• take any form of personal guarantee
• take recovery action over a borrower’s personal assets (such as their main home or personal vehicle)

If the lender turns you down

If one lender turns you down, you can still approach other lenders within the scheme.

BBLS is designed to be fast for lenders to process and quick and easy for businesses to access. To help achieve this, you will only be required to fill out a short application form online.

However the scheme is just a part of a wider package of government support for UK businesses and employees. Read more at the Government’s Business Support website.

Eligibility

You can apply for a loan if your business:

• is based in the UK
• has been negatively affected by coronavirus

Who cannot apply

The following businesses are not eligible to apply:

• banks, insurers and reinsurers (but not insurance brokers)
• public-sector bodies
• state-funded primary and secondary schools

If you’re already claiming funding

You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

How to apply

The full rules of the scheme and guidance on how to apply is available on the British Business Bank website - BBLS.