It’s finally hereFollowing the criticism of the difficulty in applying for the government’s earlier Coronavirus Business Interruption Loan, the government has now launched it’s bounce bank loan scheme, which is reputed to be far quicker and simpler to apply for.

The attractive points of this loan is that it is interest free for 12 months, and 100% guaranteed by the government with no personal guarantees required. Full details are below:

Please find below details of the government’s bounce back loan scheme. You can approach the majority of high street bank with regards to borrowing.

What is it and how can I get hold of the money?

The Bounce Back Loan Scheme (BBLS) provides lenders with a government-backed guarantee of 100% to offer loans of up to £50,000 to businesses across the UK that are losing revenue as a result of the COVID-19 outbreak.

It is administered by the British Business Bank and made available to businesses via the majority of high street banks. It is currently open until 4 November 2020.

Key features of the scheme

1. From £2,000 to £50,000 facilities, up to 25% of turnover, for eligible businesses, regardless of annual turnover.
2. Facilities: term loans
3. Repayment terms: six years, and early repayment is permitted
4. Interest rate: 2.5% per annum. No interest is payable in the first 12 months.
5. Personal guarantees: No personal guarantees. No recovery action can be taken over the borrower’s main home or primary personal vehicle but, for sole traders or partnerships, other personal assets may be at risk of recovery action.
6. 100% guarantee: The scheme provides the lender with a government-backed guarantee (100%) against the outstanding facility balance (principal and interest).
7. The borrower always remains 100% liable for repayment of the debt.
8. The borrower must self-declare they meet the eligibility criteria and make certain confirmations.

Eligibility and additional features

Be careful as some of the usual consumer protections do not apply, including those under the Consumer Credit Act 1974.

A business must confirm:

1. It is a UK limited company or partnership, or tax resident in the UK, that was carrying on business on 1 March 2020
2. More than 50% of its income is derived from its trading activity
3. The loan will not be used for personal purposes but as an economic benefit for the business
4. Whether or not on 31 December 2019 it was a ‘business in difficulty’ and does not breach state aid restrictions. If it was a ‘business in difficulty’ then, in addition, the facility will not be used for export-related activities. Get in touch if you want more details on this.
5. It is not in bankruptcy, debt restructuring proceedings or liquidation
6. Its understanding of losses that may be incurred, impact on credit rating, reduced consumer protection and that the lender will not assess affordability
7. A business will be subject to standard checks such as customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. A lender may require other information eg self assessment tax returns.

Businesses that have utilised the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Coronavirus Corporate Financing Facility (CCFF) cannot also use the BBLS unless that loan will be refinanced in full by the BBLS.

If you’d like to find out more, please get in touch with Sharon, 0203 151 2354 .