The Bounce Back Loan Scheme was announced yesterday (27th April) by Rishi Sunak. The scheme, intended for small businesses with a turnover of up to £200,000, should make it much easier for a business to borrow up to £50,000.
Loans will be for between £2,000 and £50,000. They will be for a term of up to 6 years and the government will pay all fees and interest for the first year. Importantly, unlike the CBIL (Coronavirus Business Interruption Loan scheme), the government will guarantee 100% of the loan. This should make the banks happier to lend.
Loan amounts will be limited to 25% of turnover. So, if your turnover is £120,000, you can apply for £30,000. If your turnover is greater than £200,000 you will not be eligible.
(NOTE – At the time this article was written we believed the above information was correct. However, it appears that it may not have been. The current, very sketchy, government guidance does not specify an amount. It says “small and medium sized businesses”. We will need to wait for more clarity to be more specific. As soon as we know more detail, we will publish it.)
Is your business eligible?
Full details of eligibility and underwriting criteria have yet to be published and more information will be issued in the next few days.
The little information issued says that the business must be based in the UK and have been negatively affected by coronavirus. Importantly, one stipulation is that the business must not have been in difficulty on 31 December 2019.
The scheme launches on 4 May (next Monday) and there should only be a two page application to complete. Presumably, recent accounts will also be required.
If you haven’t already done so, you may be interested in reading some of our other posts on the effect of coronavirus on business.
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