The Government’s new Bounce Back Loan Scheme (BBLS) has now gone live online and is open for applications.
This new scheme is aimed specifically at small to medium-sized businesses looking to borrow a smaller amount to assist them with cash flow and other issues.
- Businesses can borrow up to 25 per cent of their turnover, from £2,000 up to a maximum loan amount of £50,000.
- Unlike the Coronavirus Business Loan scheme (CBILS), the BBLS is 100 per cent backed by the Government – ensuring that loans can be provided with fewer checks to more businesses.
- The BBLS is being administered by the British Business Bank and the loans will be provided by accredited lenders (find details of accredited lenders by clicking here).
- There will be no interest or repayments due on BBLS finance for 12 months, and after this period the Government has agreed to a low fixed interest rate of 2.5 per cent.
- The length of the loan is for 6 years but early repayment is allowed, without early repayment fees.
- There will also be no guarantee or administration fees, or any requirements for personal guarantees.
- Businesses that have already acquired finance of less than £50,000 from the CBILS can transfer into the BBLS.
- Despite the backing of the Government, borrowers will remain 100 per cent liable for the debt from the finance.
The BBLS is open to businesses from most sectors and those applying must be able to self-certify the following to lenders:
- It is UK-based in its business activity and established by 1 March 2020;
- It has been adversely impacted by the Coronavirus (COVID-19);
- It is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility);
- It was not a business in difficulty at 31 December 2019; and
- It is not in bankruptcy, liquidation or undergoing debt restructuring.
Some organisations are excluded from BBLS finance, these include:
- Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive);
- Public sector bodies;
- State-funded primary or secondary schools; and
- Insurance companies.
Once a business has selected an accredited lender via the British Business Bank website here, they will be required to fill in a short online application form on their chosen lender’s website.
This self-certifies that they are eligible for a Bounce Back Loan facility. The bank will then undertake standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.
If the bank is satisfied that the borrower meets the conditions of the BBLS, tthey should be able to release funds within a matter of days – in some cases within 24 hours.
It may be best to make the first application with a bank which the business has an existing relationship with, as some banks have said they are only currently entertaining applications from existing clients.
If one lender turns a business down, they can still approach other lenders within the scheme.
BBLS is designed to be fast for lenders to process and quick and easy for businesses to access, which is you will only be required to fill out a short application form online for each new lender.
Here to help
If you need advice on the most appropriate form of Government-backed finance for your business or would like wider help and support as a result of the current crisis, please contact our team.