A new coronavirus crisis aid scheme will offer small businesses up to £50,000 in loans that will be 100 per cent guaranteed by the government.
The ‘Bounce Back Loan’ scheme has been unveiled by the Chancellor Rishi Sunak. It will be launched on Monday, May 4.
It will help small and medium-sized businesses to borrow between £2,000 and £50,000.
The government will guarantee 100 per cent of the loan and there won’t be any fees or interest to pay for the first 12 months.
Loan terms will be up to six years. The government says it will work with lenders to agree a low rate of interest for the remaining period of the loan.
The scheme will be delivered through a network of accredited lenders.
Announcing the scheme to MPs, the Chancellor said: “Businesses will be able to apply for these new Bounce Back Loans for 25 per cent of their turnover, up to a maximum of £50,000, with the government paying the interest for the first 12 months.”
He added: “There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in. For most firms, loans should arrive within 24 hours of approval.”
You can apply for a loan if your business:
• is based in the UK
• has been negatively affected by coronavirus
• was not an ‘undertaking in difficulty’ on December 31, 2019
The following businesses are not eligible to apply:
• banks, insurers and reinsurers (but not insurance brokers)
• public-sector bodies
• further-education establishments, if they are grant-funded
• state-funded primary and secondary schools
You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).
If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until November, 4, 2020.
Rishi Sunak told MPs: “I know that some small businesses are still struggling to access credit.
“They are, in many ways, the most exposed businesses to the impact of the coronavirus; and often find it harder to access credit in the first place.
“If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through the crisis.
“Some businesses will not want to take on more debt; which is why our focus has been on cash grants, tax cuts and tax deferrals. But for others, loans will be part of the answer.
“So today, we are announcing a new micro loan scheme, providing a simple, quick, easy solution for those in need of smaller loans.”
More information about the scheme will be published by the government shortly.