The government today is introducing the new micro-loan scheme for small businesses to help small businesses who may have been unable to access other government-backed Coronavirus loan schemes.
The scheme will launch from Monday 4 May and enable businesses to:
- Access loans of between £2,000 and £50,000 for up to six years, from a network of accredited lenders
- The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months
- After this period a fixed 2.5 per cent interest kicks in – meaning the government will pay the interest for the first 12 months
- For most firms, ‘loans should arrive within 24 hours of approval’
- Apply via a ‘simple, quick, standard form’ with ‘no complex eligibility criteria’ or ‘forward-looking tests of business eligibility’
The scheme is a not a grant but a deferred repayment loan, as such not all businesses will want to take on extra debt in uncertain times.
Unlike the Coronavirus Business Interruption Loan Scheme (CBILS), the government is to guarantee 100 per cent of these loans (as opposed to 80 per cent).
The scheme is a not a grant but a deferred repayment loan, as such not all businesses will want to take on extra debt in uncertain times.
Bounce Back Loan (“BBL”) – how it works
- Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
- There is no cap on turnover for a micro-business applying for a BBL
- Loans will be from £2,000 up to 25 per cent of a business’ turnover or £50,000, whichever is lower
- Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form
- Borrowers will fill in a two-page application form in which they will certify that they have a viable business, lifting obligations on lenders to carry out their own checks
- The length of the loan is for six years but early repayment is allowed, without early repayment fees
- No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle
- All firms trading as of March 1 will be able to get cash
- Banks will no longer require forward financials or business plans
- If you’ve already had a coronavirus business interruption loan of up to £50,000, that will be ported across to the Bounce Back Loans scheme
- 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
- The borrower always remains 100% liable for the debt
Is your microbusiness eligible for a Bounce Back Loan?
Any business can apply for a microbusiness loan, however:
- You must be UK-based and established by March 1 2020
- Have been adversely impacted by the Coronavirus (Covid-19)
- Confirm you are currently not using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility)
- You must not be in bankruptcy, liquidation or undergoing debt restructuring
Businesses will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible for a Bounce Back Loan facility. Eligible companies will be subject to standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.
Who cannot apply
The following businesses are not eligible to apply:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
Where to find your Bounce Back Loan
Accredited lenders of Bounce Back Loans are listed on the British Business Bank website.
How to apply for a Bounce Back Loan
Businesses will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible for a Bounce Back Loan facility. Eligible companies will be subject to standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.
Some State aid restrictions may apply to applications.
If you are looking to apply for a loan and need support please call us on 0114 272 4984 or email info@shipleystax.com.