Coronavirus: Bounce Back Loans

The government announced that it is launching a new small loan scheme, Bounce Back Loans which launched on 4 May 2020. 

The headline terms of the Bounce Back Loan scheme are as follows:

  • It is aimed at providing access for small and medium-sized businesses to loans from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
  • The government will guarantee 100% of the loan, rather than 80% as is the case with CBILS (The borrower always remains 100% liable for the debt).
  • The ‘standard’ loan term is 6 years, however businesses struggling to cover repayments can apply to extend their Bounce Back Loan term from six to ten years. Early repayment is allowed, without fees.
  • There are no principle repayments due for the first 12 months.
  • Interest rate fixed at 2.5%, and the interest is paid by the Government for 12 months with a Business Interruption Payment to lenders.
  • No personal guarantees are allowed and no recovery action can be taken over a principal private residence or principal private vehicle.
  • Interest-only periods: Businesses struggling to repay their Bounce Back Loan are able to make up to three requests to pay interest-only, for periods up to six months.
  • Payment holidays: Businesses experiencing very serious difficulty in repaying their Bounce Back Loan can request a payment holiday to pause repayments, but only after having made six repayments. Only one payment holiday request can be made, for a period of up to six months.

Update from 2 November: Businesses will be able to ‘top up’ their loans under the scheme had the full amount permitted not been initially borrowed – lesser of £50,000 and 25% of total turnover. This option can only be used once, and it should be available to businesses from the week commencing 9 November.

As with Coronavirus Business Interruption Loan Scheme, the Bounce Back scheme will be delivered through a network of accredited lenders.

Eligibility

Applicants will need to fill in an online application form. This self-certifies a business is eligible for a loan under the BBLS.

You can apply for a loan if your business:

  • Is UK-based in its business activity, and established by 1 March 2020
  • Has been negatively affected by Coronavirus
  • Is not in bankruptcy, liquidation or undergoing debt restructuring

The following businesses are not eligible to apply:

  • Banks, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • Further-education establishments, if they are grant-funded
  • State-funded primary and secondary schools

A key point to note is that businesses already claiming under CBILS cannot apply for Bounce Bank Loans. However businesses that have already received a loan of up to £50,000 under CBILS, will be able to transfer this loan into the Bounce Back Loan scheme via arrangement with their CBILS lender before 4 November 2020.

Further details are limited at this stage with more to follow in terms of applying for these loans. However we will update this page as it become available.

For further information or advice on funding for your business, please get in touch with a member of our Corporate Finance team on 01903 234094.

Last updated 3 November 2020.