The Chancellor has announced a new ‘Bounce Back Loan Scheme’ provide a simple and quick solution for smaller and medium sized businesses. When the scheme opens, businesses can apply online through a short and simple form. The main elements are:
- Loans of £2,000 to £50,000, capped at 25% of turnover
- No fees and the government will cover interest for the first 12 months
- The government will work with lenders to agree a low rate of interest for the remainder of the loan period
- The government will provide a 100% guarantee to lenders
- Loan terms of up to 6 years with no repayments in the first year
The scheme will be delivered through a network of accredited lenders.
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 31 December 2019
Who cannot apply
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
If you’re already claiming funding
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 4 November 2020.
How to apply
The Bounce Back Loan scheme will launch on 4 May 2020. More details here.
The Coronavirus Business Interruption Loan Scheme (CBILS) has been expanded with changes to the scheme’s features and eligibility criteria. Access to the scheme now includes smaller businesses who would have previously met the requirements for a commercial facility but would not have been
eligible for the CBILS.
• No personal guarantees for facilities under £250k.
Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
• Personal guarantees for facilities above £250k.
Personal guarantees may still be required, at the lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.
• A Principal Private Residence (PPR)
cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
For all facilities, including those over £250,000, CBILS can now
support lending to smaller businesses even where a lender
considers there to be sufficient security.