New Business Bounce Back Loan Scheme

Date: 28/04/20

New Business Bounce Back Loan Scheme

The Government has announced further support for small and medium-sized businesses (SME’s) in the form of the Business Bounce Back Loan scheme. This loan will be 100% Government backed which means that the application process should be smoother and banks are more likely to accept applications. The loan is for sums between £2,000 - £50,000 and terms up to 6 years with no repayments due for the first 12 months. Also like the Coronavirus Business Interruption Loan Scheme (CBILS) there will not be any fees or interest to pay for the first 12 months and the Government have also said they will be working with lenders to agree a low rate of interest for the remaining period of the loan.

If you have already claimed funding through CBILS then you will not be able to apply under this new scheme. However, if the loan you received under CBILS is £50,000 or under then you will be able to transfer it to the Bounce Back Loan scheme. This can be arranged with your lender but you will only be able to transfer it up to 4 November 2020.

Our view on the new scheme is that this is just the type of funding that is required and complements the main CBILS scheme very well. The simplified application should help to streamline the application process and the ability to defer capital repayments for 12 months provides business owners the time to re-structure their business and the confidence to accept the loan. Where the decision for Banks lending to a business was marginal, delays and rejections were likely, but this scheme will be a game changer for some businesses.

This scheme will be launching on 4 May 2020. You can apply if your business:

  • is based in the UK
  • has been negatively affected by coronavirus
  • was not an ‘undertaking in difficulty’ on 31 December 2019

Businesses not eligible include:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • state-funded primary and secondary schools

James Cornthwaite FCA CTA

Author: James Cornthwaite FCA CTA

A former pupil at St Aidan’s C of E High School, James attended Blackpool Sixth Form College and Lancaster University, graduating in 2004, gaining BSc. first class honours. He joined Moore and Smalley, Preston in 2005 and qualified as a...

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