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Last week, we discussed the Small Business Grant Scheme that had been introduced by the UK government in order to help small businesses during the coronavirus crisis. Although this scheme is extremely beneficial for businesses, it is not the only scheme that can help – there is also the Bounce Back Loan Scheme.

In this article, we will discuss the Bounce Back Loan Scheme, how to check if you are eligible and how your business can apply for this scheme.

 

What is the Bounce Back Loan Scheme (BBLS)?

As many small businesses have lost revenue through having to close their doors during lockdown, the Bounce Back Loan Scheme allows businesses to apply for a loan which is between £2,000 and up to 25% of their turnover. Businesses can borrow a maximum of £50,000.

Unlike the Coronavirus Business Interruption Loan Scheme (CBILS), which was only 80% state-backed, BBLS is completely supported by the UK government and is 100% state-backed.

 

What makes a business eligible for the Bounce Back Loan Scheme?

To be eligible for this scheme, your business needs to:

  • Be UK-based
  • Be considered viable by banks
  • Have been established before 1 March 2020
  • Have been adversely impacted by the coronavirus crisis

Your business cannot be:

  • A bank, insurer or reinsurer
  • A public-sector body
  • A state-funded primary or secondary school

 

How can I apply for the Bounce Back Loan Scheme?

Follow these steps to apply for BBLS:

  1. Find a lender through searching British Business Bank’s list of accredited lenders and partners
  2. Once you have found a suitable lender, navigate to their official website – it is best to approach your own bank first if possible
  3. Complete a simple application form on the lender’s website (usually only two pages long)
  4. Await a response from the lender – the lender will decide whether you are eligible for a loan
  5. If the lender does not accept your application, you are able to apply with other lenders under the scheme

 

Source: Overbond

What do I need to do once I have been paid the loan?

It is guaranteed by the government that once you receive your loan, you will not have to pay any fees or interest for the first 12 months. However, once the year has finished, you will be liable to pay an interest rate of 2.5% a year.

 

Frequently asked questions regarding the Bounce Back Loan scheme

  1. How long does the loan last?

The Bounce Back Loan lasts 6 years, but you are able to pay off the loan sooner if you wish without having to pay a fee.

  1. What if I am claiming under the Coronavirus Business Interruption Loan Scheme (CBILS), am I still eligible for the Bounce Back Loan scheme?

Unfortunately, you are not able to apply for a Bounce Back Loan if you are already claiming under CBILS.

  1. If I have already received a loan from another scheme, can I transfer it to the Bounce Back Loan Scheme?

Yes, if you have received a loan of up to £50,000 under the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) or COVID-19 Corporate Financing Facility you will be able to transfer it to your Bounce Back Loan Scheme. However, you need to negotiate this with your lender before 4 November 2020.

  1. My bank is not featured on British Business Bank’s list of accredited lenders and partners, what should I do?

If you are unable to find your bank on British Business Bank’s list, you should enquire with your bank on whether they plan to join the scheme. If not, you can always explore options with other lenders.

 

Do you need any more help with BBLS?

We are aware that at this difficult time many businesses are under pressure and there are many new government schemes to consider. This can become confusing and it is key that your business gets the correct guidance that it needs. We are here to support you through the coronavirus crisis, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.

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