Chancellor Rishi Sunak yesterday unveiled a new loan scheme aimed at small to medium sized businesses. The Bounce Back Loans scheme (BBLS) will offer loans up to £50,000 interest free for the first 12 months.
The scheme will launch on 4th May 2020, and the amount that can be borrowed is capped at 25% of turnover. Loan terms will be up to six years and no repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan. It is important to note that it is only available for businesses who were not in any difficulty before 31st December 2019.
The Chancellor said: “Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.”
Businesses can apply through an online form, with cash being distributed to successful applicants within 24 hours.
Lenders will be approved by the British Business Bank and will process these loan applications following a simple online application form. Lenders have been asked to assess applications at pace without the need for forward looking financial plans.
The BBLS sits alongside a package of support from the government including the Coronavirus Business Interruption Loan Scheme (CBILS), capital repayment holidays, extended overdrafts and asset-based finance. It is important to note that businesses cannot apply for the BBLS if they are already claiming under the CBILS. If you have 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 4th November 2020.
Lenders approved by the British Business Bank are now working to get the new scheme up and running from Monday. Further details will be provided for those businesses who wish to apply from the end of this week.
Further information can be found here https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan