- 28th April 2020
- Posted by: Edward Kirkby
- Category: Coronavirus
On the 27th April, the government announced a new initiative – Bounce Back Loans, designed to support small businesses by providing fast-track access to finance.
Bounce back loans of up to £50,000 will be made available to ensure that the small businesses suffering the most at the hands of the Coronavirus outbreak can secure vital funds needed to survive.
Unlike the more restrictive Coronavirus Business Interruption Loan Scheme, businesses will not be required to prove viability by way of a business plan and the application will consist of a “simple, quick, standard form.”
Any loan taken out under this initiative will be backed 100% by the government, and this extends to the government covering all interest and fees for the first 12 months. A crucial point for business owners is that in addition to this, no repayments will be due within the first 12 months.
To ensure that funds reach businesses as soon as possible, it has been announced that most loans will arrive with the business within 24 hours of approval. This should mean that the timescale between application and receipt of the loan is days, rather than a lengthy wait that could further disadvantage those businesses in need.
As stated, the loans available will be for a maximum of £50,000 or 25% of turnover (whichever is the lower amount.) Although the funds available are smaller than those available under CBILS, this scheme is designed to aid the smallest of businesses and will provide much needed cash flow relief to many.
Who is eligible?
The Chancellor, Rishi Sunak, has stated that there will be no “complex” eligibility criteria to meet in order to secure a bounce back loan.
How to apply
At this stage we know that to apply, businesses will need to complete an online standardised form with an accredited lender.
More information is expected to be released on how businesses can access a Bounce Back Loan when the scheme goes live on Monday 4th May.
Please get in touch if you would like any further advice on the Coronavirus and government support.