Background

On 27 April 2020 the Government announced a new Bounce Back Loan Scheme to help small and medium sized businesses borrow between £2,000 and 25% of turnover up to a cap of £50,000.

The Scheme will launch on 4 May 2020 through the lenders taking part in the Coronavirus Business Interruption Loan scheme.

Businesses will be able to apply online from 9 am on 4 May 2020 through a short and simple online form and payments will be made within 24 hours of approval.

A summary of the Scheme is set out below. More information about the Scheme will be published shortly by the Government:

Loan terms

The government will guarantee 100% of the loan.

There will not be any fees or interest to pay for the first 12 months.

Loan terms will be up to 6 years. 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.

Loans can be repaid early without any penalty

Eligibility

The Scheme is available for small and medium sized businesses:

  • based in the UK;
  • who been negatively affected by coronavirus;
  • was not an ‘undertaking in difficulty’ on 31 December 2019 and was trading as of 1 March 2020.

There will be no need to show future viability of the business and forward financials or business plans will not be required. However, some anti-fraud checks will have to be completed.

Banks, insurers and reinsurers (but not insurance brokers), public-sector bodies, further-education establishments if they are grant-funded, and state-funded primary and secondary schools are not eligible for the Scheme

Relationship with CBILS

A business cannot apply under this Scheme if they are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

If a business has already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan Scheme, this can be arranged with the lender until 4 November 2020.

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