UPDATED ON 5 MAY AT 16:35
The new Bounce Back Loan Scheme launched on Monday 4 May. The scheme allows for business to borrow from £2,000- £50,000 over 6 years, by in most cases filling in a short online application on their banks website.
Most of the high street banks launched the scheme and it is envisaged that more will follow.
- Businesses can borrow between £2,000 and £50,000 and access the cash within days
- Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form
The Chancellor said the new Bounce Back Loans scheme, which provides loans of up to £50,000, will help bolster the existing package of support available to the smallest businesses affected by the Coronavirus pandemic.
How do the Bounce Back Loans work?
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days, and comes alongside the £6 billion awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.
The government, which has been consulting extensively with business representatives about the design of the new scheme, will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days – providing immediate support to those that need it as easily as possible.
How do I apply?
The start point to apply should be your own business bank (provided they are members of the scheme).
The Chancellor has instructed the banks that the interest rate on these loans will be 2.5% and no fee with repayments starting in month 13.
The Government will pay the interest on the loan for the first 12m, the Government guarantee 100% of the loan to the bank – without the need for personal guarantees. Please remember this is a loan, and whilst the Government provide a 100% guarantee to the bank, the business remains liable for repayments from month 13 onwards.
Businesses have already started to apply with initial feedback being that is a simple and quick process.
If you have previously agreed a Coronavirus Business Interruption Loan for under £50,000, you can ask to have it switched to this new loan.
Further details of the Bounce Back Loan scheme for businesses wanting to borrow up to £50,000 are listed below: