Bounce Back Loan scheme launches

Small businesses will be able to apply for quick and easy-to access loans of up to £50,000 from today – with the cash expected to land within days.

Businesses will be able to borrow between £2,000 and £50,000. The loans will be 100 per cent government backed for lenders, and businesses can apply online through a short and simple form.

Thousands of small firms and sole traders – including hairdressers, coffee shops and florists – will be eligible for the loans, designed to help them make it through the coronavirus outbreak.

Business owners can apply to accredited lenders by filling out a simple online form, with just seven questions to answer.

The government has also agreed with lenders, who include the five largest banks, that an affordable flat rate of 2.5 per cent interest will be charged on these loans.

Any business that has already taken out a Coronavirus Business Interruption Loan of £50,000 or less can apply to have these switched over to the new scheme.

The full rules of the scheme and guidance on how to apply is available on the British Business Bank website. https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/

The Bounce Back Loan scheme is the latest step in a package of support measures launched by Chancellor Rishi Sunak.

You can apply for a loan if your business is based in the UK, has been negatively affected by coronavirus and was not an ‘undertaking in difficulty’ on December 31 2019.

You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

According to advice from the British Business Bank, (https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/) ideally should initially approach your own bank for a loan – but you don’t have to. And you can approach another lender if you are rejected by another

Your business must be able to self declare to the lender that it:

• has been impacted by the coronavirus (COVID-19) pandemic
• was not a business in difficulty at December 31 2019 (if it was, you must confirm your business complies with additional state aid restrictions under de minimis state aid rules)
• is engaged in trading or commercial activity in the UK and was established by 1 March 2020
• is not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF), unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility
• is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance
• derives more than 50 per cent of its income from its trading activity (this requirement does not apply to charities or further-education colleges)
• is not in a restricted sector

Bounce Back Loans are available to businesses in all sectors, except the following:

• Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive)
• Insurance companies
• Public-sector organisations
• State-funded primary and secondary schools

Announcing the scheme Mr Sunak said: “Small businesses will play a key role creating jobs and securing economic growth as we recover from the coronavirus pandemic.

“The Bounce Back loan scheme will make sure they get the finance they need – helping them bounce back and protect jobs.”

Eligible companies will be subject to standard customer fraud, anti-money laundering (AML) and Know Your Customer (KYC) checks prior to any loan being made. Some State Aid restrictions may apply to applications. The borrower always remains 100 per cent liable for the debt.