Bounce Back Loan Scheme

Applications for the Bounce Back Loan Scheme (BBLS) are now open and will remain open until at least 4 November 2020.

Most UK businesses – whether sole trade, partnership, LLP or limited company – are expected to be eligible for BBLS and there is no turnover threshold that applies.

Eligible businesses are those that can self-declare that they:

• Have been affected by the COVID-19 pandemic
• Were not a ‘business in difficulty’ as at 31 December 2019 (this means that accumulated losses did not exceed more than half of business’s share capital at this point) although this point does not apply to SME’s less than 3 years old
• Are not currently in bankruptcy or liquidation
• Have not already obtained BBLS lending
• Have not obtained CBILS lending in respect of the COVID-19 pandemic unless the BBLS will refinance the whole of this lending facility
• Are engaged in trading or commercial activity in the UK and were established by 1 March 2020
• Will use the loan only for business purposes, and are able and intend to meet the repayments in the future.
• Derive more than 50% of their income from trading activities. This point does not apply to charities or further education colleges
• Are not a credit institution, insurance company, public-sector organisation or a state funded primary or secondary school

The size of loans available through BBLS range from £2,000 to £50,000 but will be limited to 25% of the business’s turnover.

Loans provided under BBLS will be fee and interest free for the first 12 months. Interest will be charged to the borrower after the first 12 months at the rate of 2.5% per annum with the maximum loan term being 6 years.

Applications should be made online through one of the accredited lenders listed at this British Business Bank webpage.

Whilst it is recommended that you should approach your own bank in the first instance, applications can be made with any of the providers if you are unable to access the loan required.  Initial indications are that the banks are prioritising applications from existing customers.

Lenders will not be able to take any form of personal guarantee, or take recovery action over a borrower’s personal assets in the event of non-repayment. The borrower will however remain 100% liable for the repayment of the loan, with the government guarantee only stepping in should the business fail.

It is expected that successful applications will allow funds to be paid to the applicant business within a matter of days.

Full details of the scheme are available at https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/

If you should have any queries on applying for this or any of the other government support schemes, please get in touch with your usual contact at RPG.