The British Chancellor, Mr Sunak, has recently announced the launch of a new scheme, the “Bounce Back Loan Scheme (BBLS)”, which has come into force from Monday 4 May 2020. This scheme provides financial support to small and medium-sized 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 is available through a range of British Business Bank’s 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 British Government guarantees 100% of the loan against the outstanding balance of the finance (both capital and interests). Also, the Government will cover the first 12 months of interest payments.
Businesses are not required to make repayments for the first 12 months. However, they will still have to repay the loan and any interest after the first 12 months. Lenders are not permitted to take personal guarantees or take recovery actions over a borrower’s personal assets (such as their main home or personal vehicle). Government and Lenders have agreed to set the interest rate at 2.5% per year. The standard length of the loan is six years. However, early repayments are permitted during the term of the loan, without early repayment fees.
WHO IS ELIGIBLE
Your business must be able to self-declare to the lender that it:
- has been impacted by the coronavirus (COVID-19) pandemic;
- was not a business in difficulty at 31 December 2019 (if it was, you must confirm your business complies with additional state aid restrictions under de minimis state aid rules);
- is engaged in trading or commercial activities in the UK and was established before 1 March 2020;
- is not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF), unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility;
- is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance;
- derives more than 50% of its income from its trading activity (this requirement does not apply to charities or further-education colleges).
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.
CRITERIA TO APPLY
- Find a British Business Bank’s accredited lender at www.british-business-bank.co.uk.
- Approach your selected lender, ideally via the lender’s website first.
- Fill in a short online application form on your lender’s website, which self-certifies whether you are eligible for a Bounce Back Loan. Eligible companies will be subject to standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Some State aid restrictions may apply to applications.
- Your lender will review your application and if eligibility criteria are met and the application approved, your funding request, submitted via the new standardised online form, may be available within a few days.