Bounce back loans

There are many reasons a business would need a bounce back loan after an interrupted period of time, such as the one caused by the Covid-19 pandemic. You may need new stock or equipment to get your business back to running as normal.

You will also find yourself with a wage bill back on your hands, either every week or every month. Any staff you’ve placed onto a furlough scheme will need 100% of their wages paid by you once they start to work for you again.

Small businesses in particular, will need cash just to get back on their feet and stabilise themselves back into the regular working routine. Even things such as utility bills will have to start being covered again, so if you haven’t been using any power in your business over the past few months, you can expect to find yourself with costs of that kind and more to cover on a regular basis as soon as you reopen.

What is the Bounce Back Loan Scheme?

The Bounce Back Loan Scheme is a UK government-backed loan program that helps small businesses access the funding they need to survive the coronavirus pandemic. Under the program, businesses can borrow up to 25% of their annual turnover, up to a maximum of £50,000. The loans are 100% guaranteed by the government, and they can be used for any purpose. Repayments are deferred for 12 months, and there is no interest or fees charged on the loans.

The scheme is open to businesses of all sizes, including self-employed individuals. To apply, businesses must complete an online application form. Once approved, the funds will be transferred directly into the business’s account within days. The Bounce Back Loan Scheme is one of several measures introduced by the UK government to support small businesses during the pandemic. Others include the Coronavirus Business Interruption Loan Scheme and the Coronavirus Job Retention Scheme.

Key Features of the scheme

• Loans of between £2,000 to £50,000 (up to a maximum of 25 per cent annual turnover)
• The government covers the first 12 months of interest (this means you pay 0 per cent for the first year)
• No repayments required for the first 12 months
• Interest rate of 2.5 per cent
• 6-year loans with no early repayment charges
• The government provides a 100 per cent guarantee to the lender

How do I access the Bounce Back Loan Scheme?

To access the bounce back loan scheme, you will need to fill out an online application form on the government website. You will also need to provide proof of your business’s turnover and bank statements from the last 12 months. Once your application has been approved, the money will be deposited into your business account within days.

If you need help with your application, you can contact the British Business Bank on 0300 456 3565. The BBLS is a vital lifeline for small businesses across the UK, and it is important that you act quickly if you think you might be eligible for a loan.

How do I apply to ‘top-up? my existing Bounce Back Loan?

Applications for BBLS ‘top-ups? are due to close on March 31 2021 along with new applications, so if you want to request a top-up to your loan you will need to contact your lender.

Is my business eligible for a Bounce Back Loan?

In order for a business to be eligible to apply for the BBL scheme it must be:

• Able to confirm that it has been adversely impacted by the coronavirus (Covid-19).
• Based in the UK and was carrying on its business on 1 March 2020.
• Applying to borrow between £2,000 and £50,000 capped at 25% of annual turnover.
• Able to declare that the business was not insolvent or otherwise a business in difficulty on 31 December 2019. Businesses unable to make this declaration will be asked to complete a form to assess their eligibility under State Aid rules.      

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.

You cannot apply for a new BBL loan if you already have Coronavirus Business Interruption Loan (CBIL) scheme loan.

I have an existing Coronavirus Business Interruption Loan or Overdraft (CBIL) for under £50,000, can I transfer this to a BBL loan?

Any customer with a CBIL scheme loan or overdraft of £50,000 or less will be able to switch that facility to a BBL scheme loan should they wish to do so over the next few months by arrangement with lenders.

What information will I have to provide to apply?

Applying for a business loan can seem like a daunting task, but it doesn’t have to be. Most lenders will require some basic information about your business, such as your business name, address, and contact information.

They’ll also need to know some financial details about your business, like your bank account information and your annual revenues. If you don’t have a business bank account yet, don’t worry – the lender may just need some additional information to verify that you’re a legitimate business.

So, gather up all the required information and fill out that application form with confidence!

How do I evidence my viability?

Business owners should carefully review and understand the repayment costs associated with any loan they are considering before signing the application form. This is because failing to make timely repayments can have serious consequences for the business, including damaging their credit score and making it harder to secure funding in the future.

By taking the time to thoroughly review the repayment terms, businesses can ensure that they are able and willing to make the required payments. This will help to protect their financial future and keep their business on track.

Will I have to pay interest on my loan?

The government has announced a new Business Interruption Payment to help businesses affected by the coronavirus pandemic. The Payment will cover the first twelve months of interest payments and any lender-levied charges on your behalf.

After this twelve-month period, interest will be payable at the government-determined rate of 2.5 per cent. The Payment will be available from 1 July 2020, and businesses can apply through their lender. For more information, visit the government’s website.

Can I repay my loan early?

Borrowing money can be a tricky business. You want to make sure you’re getting the best deal possible, while also being prepared for any unforeseen circumstances that may arise. That’s why it’s important to know that, if you borrow under the BBL scheme, you won’t be penalized for repaying your loan early.

You’ll still be responsible for paying back the full amount of the loan, plus interest and fees charged by the lender after the initial 12-month period, but you won’t have to worry about Early Repayment Charges. So if you’re considering borrowing money for a big project, the BBL scheme is definitely worth looking into.

What if I am struggling to repay my BBLs loan and require additional flexibility?

The Bounce Back Loan scheme has helped many small businesses stay afloat during the pandemic. However, with the end of the scheme looming, many businesses are facing the prospect of having to repay their loans in full. The good news is that the government has announced an extension to the scheme, which will give businesses more time for those who can’t afford to repay bounce back loan.

Borrowers now have the option to:

• Extend the length of the loan term from six years to ten
• Make interest-only payments for six months, with the option to use this up to three times throughout the life of the loan
• Once six payments have been made, request a six-month repayment holiday.

Under the new pay-as-you-grow plans, businesses will be able to extend their repayment period from six years to ten years. They will also be able to make interest-only payments for six months at a time. This will help to ease the financial pressure on small businesses and give them a better chance of surviving the pandemic.

Does it cover all sectors?

The BBL scheme covers most business sectors, with some exceptions. These include businesses tat operate in fisheries or aquaculture, agriculture, or logistics and is an Undertaking in Difficulty, then restrictions apply.

For businesses active in fisheries and aquaculture, Bounce Back Loans are not available for the activities listed in Article 1, Paragraph 1 of European Commission Regulation 717/2014.

Will the amount of money available for Bounce Back Loans run out?

The government has indicated that the BBL Scheme will be demand led there is no maximum cap set for total lending to be support lenders. There is no immediate need to approach lenders if you do not need finance in the short-term.

Is the BBL scheme a loan or a grant?

The BBL scheme is a loan and not a grant. The scheme provides a guarantee to a lender to allow them to provide finance, but businesses will still have to repay this loan or facility.

However, there are concerns that many businesses will not be able to repay the loans when they become due. As a result, there is growing pressure on the government to convert the loans into grants. Prime Minister Boris Johnson has said that the government is “looking very carefully” at the issue, and a decision is expected to be made in the coming weeks.

Whatever the outcome, it is clear that the Bounce Back loans have been a vital support for small businesses during these uncertain times, nut it is highly unlikely that that a bounce back loan will be converted into a grant.

Will I have to provide a personal guarantee or security to take out a Bounce Back Loan?

There are no personal guarantees or security required to take out a bounce back loan.

Can I use a BBL to refinance existing borrowing?

You can use a BBL to refinance existing borrowing as there is no restriction on the total amount of scheme facilities that may consist of refinancing.

Bounce Back Loan extension

The Bounce Back Loan scheme has helped many small businesses stay afloat during the pandemic. However, with the end of the scheme looming, many businesses are facing the prospect of having to repay their loans in full. The good news is that the government has announced an extension to the scheme, which will give businesses more time to repay their loans.

Under the new pay-as-you-grow plans, businesses will be able to extend their repayment period from six years to ten years. They will also be able to make interest-only payments for six months at a time. This will help to ease the financial pressure on small businesses and give them a better chance of surviving the pandemic.

I was declined a CBIL scheme loan, is there any point applying for a BBL?

If you was declined for a CBIL Scheme facility, you can still apply for a bounce back loan. The BBL scheme eligibility is different to CBILS and you should factor that into your decision to apply.

I have applied for a CBIL loan under £50,000 but I am waiting for a response, what should I do?

If you have applied for a CBIL loan under £50,000, you may withdraw the application and apply for a BBL. It is not possible to apply for a CBIL loan or overdraft under £50,000 from 4 May 2020.

Will the interest rate vary by bank?  Who has set the interest rate?

One of the key features of the BBL is that the interest rate is set by the government, meaning that all accredited lenders will offer the same rate. This rate is currently 2.5% per annum, and is payable after 12 months. This interest rate is significantly lower than most other business loans on the market, making the BBL an attractive option for many small businesses.

Although the BBL is a great option for many businesses, it’s important to remember that the government does not control or set the interest rates for all business loans.

How long must I have been trading for?

Your business needs to be established by 1 March 2020. The length of your business and its trading history is not an eligibility requirement.

Is turnover net or gross of VAT?

Turnover is as reported in financial accounts or tax returns.

Will taking out a BBL loan impact my credit rating?

Taking out a BBL may impact your credit report as a lender may register your Bounce Back Loan with credit reference agencies, and credit ratings may be affected by any failure or delay in repaying.