Announced the end of last week, and open for application from today, 4th May 2020.
The Bounce Back loans are a simplified form of loan, compared to the Coronavirus Business Interruption Loan Scheme (CBILS).
Per HM Government:
The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000.
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.
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 an ‘undertaking in difficulty’ on 31 December 2019
The major differences to the Coronavirus Business Interruption Loan Scheme (CBILS). would seem to be:
|Maximum loan||The lower of £50k or 25% of turnover||£5m|
|Term||Up to six years, no early repayment fees||Between three and six years depending on type of finance|
|Payment Holiday||Up to 12 months||Discretionary|
|Fees and Interest charged to borrower||No fees / interest first year, then 2.5% interest||No fees or interest first year. Presumably commercial rates thereafter.|
|Security||No security to be taken, lenders prohibited from recovery over personal assets like home||Security may be required, but absence of security should not be a reason for turning loan down|
|Personal Guarantees (where borrower is a company)||No guarantees.||Personal Guarantees may be required on amounts over £250k, private home excluded and recoveries capped at 20% of the loan.|
|Application Process||Simplified process on a lender by lender basis||Requirements vary from lender to lender, but are likely to include:
On the guarantee and security issue, its not as bright as it seems – the borrower is still responsible for 100% of the loan. Guarantees and security make the lenders recovery process easier.