The Chancellor has announced a 100% government backed loan scheme for small businesses, designed to offer up to £50,000 of fast-track finance for those affected by coronavirus.
The bounce back loan scheme will enable businesses to borrow between £2,000 and £50,000 and access the cash within days, and in some cases within 24 hours.
Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple two-page standardised application form. There are no forward-looking business viability tests or eligibility criteria for the finance.
The length of the loan is 6 years, but you can repay early without paying a fee. No repayments will be due during the first 12 months.
Who can apply?
You can apply for a loan if your business:
- is based in the UK
- was established before 1 March 2020
- has been adversely impacted by the coronavirus
You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), or COVID-19 Corporate Financing Facility.
However, if you’ve already received a loan of up to £50,000 under one of these schemes you can transfer it into the Bounce Back Loan scheme. You have until 4 November 2020 to arrange this with your lender.
How can you apply?
There are a number of lenders participating in the scheme including many of the main retail banks. You should approach a suitable lender via their website.
The lender will decide whether to offer you a loan or another type of finance and you’ll be responsible for repaying 100% of the amount borrowed.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.