Easy access 'bounce back' loans launched for smallest firms
New, easy access ‘bounce back’ loans for small firms launch today with ‘self-certifying’ borrowers and fewer checks by banks set to see payouts within days.
The Bounce Back Loan Scheme offers small and micro businesses in all sectors loans from £2,000 to £50,000
With a simple form, no fees, no interest for the first year, repayments only starting after a year and low interest of 2.5 per cent they are expected to be popular.
The government is also providing 100 per cent guarantees to lenders, ensuring they get their money back even if a borrower defaults or goes bust.
The move was introduced after criticism that other loan schemes with 80 per cent government guarantees were slow because banks - on the hook for 20 per cent - were carrying out time consuming checks.
To apply, a business must self-certify the following:
· Confirm it is UK-based and established by March 1 2020
· Confirm it has been adversely impacted by the coronavirus
· Confirm it is not currently using a government-backed coronavirus loan scheme (unless using BBLS to refinance a whole facility)
· Confirm it is not in bankruptcy, liquidation or undergoing debt restructuring
To apply, businesses should check the British Business Bank website to find out which lenders provide Bounce Back Loans. They will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible.
Lenders under the scheme can provide loans of up to £50,000 over six years.
The new loans complement other schemes provided by the government to help businesses during the coronavirus epidemic including the Coronavirus Business Interruption Loans Scheme (CBILS), the Coronavirus Large Business Interruption Loans Scheme (CLBILS) and the Future Fund for firms that are either pre-revenue or pre-profit and typically rely on equity investment.