The Chancellor launched the Bounce Back Loan Scheme (BBLS) in April to help small and medium-sized businesses suffering from the effects of the coronavirus pandemic.
As Mr Sunak mentioned in his Summer Economic Statement, 1 million businesses have applied to the scheme and £31 billion has been approved in loans so far.
However even though it has been three months since the announcement, many people are still not sure how the scheme works.
So here’s everything you need to know about Bounce Back Loans.
How Do Bounce Back Loans Work?
With these loans:
- Small and medium-sized enterprises can borrow up to 25% of their turnover.
- The maximum loan amount is £50,000.
- They are 100% guaranteed by the government.
- No interest or fees are accrued for the first year.
- After the first twelve months, the interest rate becomes 2.5% a year.
- There are no repayments to be made in the first year. This is crucial, as this gives businesses some breathing space and a chance to recover from the turbulence of the pandemic.
- The term is for six years. But if you can repay it sooner? No problem! There are no early repayment penalties.
What Are The Criteria To Apply For Bounce Back Loans?
To apply for help on the Bounce Back Loan Scheme (BBLS), a business:
- Must be based in the U.K.
- Must have been established before 1 March 2020.
- Will have been negatively impacted by the coronavirus pandemic.
- Cannot be a bank or insurance company.
- Cannot be in the public sector, or a state-funded school.
- Must not have claimed funding under any other schemes such as the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS), or the COVID-19 Corporate Financing Facility.
If you meet these criteria and wish to apply, there are several lenders participating in the scheme. You’ll find the list of the Bounce Bank Loan Scheme lenders here.
And a tip: You don’t have to do this, but it might be easier to apply wherever you do your business banking, if they are on the list.
What Do I Need To Apply For a Bounce Back Loan?
The exact details of what you need to provide to apply for a Bounce Back Loan may vary slightly from lender to lender, but in broad terms this is what you’ll need to do:
- You’ll be asked to fill in a short application.
- You’ll be asked to confirm that you qualify, i.e. that you meet the criteria listed above.
- To provide details about your business such as business name and address, contact details, and your annual turnover.
The process should be easier if you apply with your business bank, as there is already an existing working relationship. They already have some data and knowledge about you and your business, which should simplify and accelerate the application process.
What Should I Do Next:
If a Bounce Back Loan sounds like the kind of support you need or qualify for, it’s worth having an initial conversation with your accountant.
And once you decide to proceed, contact any of the banks listed in the list of lenders above to start your application.
Still Struggling To Understand How It Works?
If you need further clarification about the Bounce Back Loan Scheme (BBLS) and how it works, you can contact me here.