Reminder of the basics

This has been reported to be available from today. It is designed to plug the gap due to loss of income until lockdown is ended and/or business returns to normal.

The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000. (Subject to a limit of 25% of your last year’s turnover.)

The government guarantees 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. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan, currently reported at 2.5%.

The scheme will be delivered through a network of accredited lenders. The rules dictate this will be a simplified process to apply and qualify. You should contact your own bank first probably via their website, which will give you guidance to apply on-line. If you need any information to assist you, please do not hesitate to contact us.

Eligibility

  • You can apply for a loan if your business:is based in the UK
  • has been negatively affected by coronavirus
  • was not “in difficulty’ on 31 December 2019

If you’re already claiming funding

You cannot apply if you’re already claiming under the Business Interruption loan Scheme. BUT 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.

You don’t pay the first 12 months interest (or make any repayments)
The Government will make a Business Interruption Payment (BIP) to cover the first 12 months of interest payments.

The borrower does not have to make any repayments for the first 12 months.

Full government guarantee

The scheme provides the lender with a full (100%), government-backed guarantee against the outstanding balance of the finance (both capital and interest).

BUT the borrower still remains 100% liable for the debt. The only way the government guarantee will come into effect is if your business fails and is liquidated. The bank cannot then come to you personally to repay the loan. The government will pay it to the bank.

Lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).

If you don’t use the loan or can pay it back when business returns to normal…

Just pay it back to the bank within 12 months and you will pay no interest or repayments. Or pay it back any time after 12 months, subject to making repayments and paying interest. There are no early repayment fees.

What if my bank doesn’t give me the loan?

You can also consider approaching other lenders if you are unable to access the finance you require.

How easy is the application?

You will need to fill in a short application form online, which self-certifies that your business is eligible for a loan under BBLS.

If your business is eligible, it will be subject to appropriate customer fraud, Anti-Money Laundering  and Know Your Customer  checks.

Who decides if I get the loan?

The lender has the authority to decide whether to offer you finance.

How quickly will I get a decision?

BBLS is designed to be fast for lenders to process and quick and easy for businesses to access. To help achieve this, you will only be required to fill out a short application form online.

What information is needed to apply?

  • Your business must be able to self‑declare to the lender that it:has been impacted by the coronavirus (COVID-19) pandemic
  • was not in financial difficulty as at 31 December
  • is engaged in trading or commercial activity in the UK and was established by 1 March 2020
  • is not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid
  • Corporate Financing Facility Scheme (CCFF), unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility
  • is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance
  • derives more than 50% of its income from its trade.

BAYLISS WARE
CHARTERED ACCOUNTANTS
4 MAY 2020