Coronavirus Update – Bounce Back Loans
Chancellor Rishi Sunak announced a further measure to help small and medium sized businesses who have been negatively affected by COVID-19 and need to borrow between £2000 and £50000.
Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders.
The existing CBILS (Coronavirus Business Interruption Loan Scheme) is still available for larger loans but some smaller businesses have been unable to meet the criteria for this.
The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. The government will work with lenders to agree a low rate of interest for the remaining period of the loan. Please note, that this is a loan, not a grant, and will have to be repaid unless the borrower becomes insolvent.
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 in financial difficulties 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
Please note that, for Limited companies, you will not be able to use these funds to pay dividends unless you have the retained profits allowing you do so.
The online system for application is expected to be available from 4th May. Please see the link below as this will updated once the system goes live.