The chancellor has announced The new Bounce Back loan scheme, allowing smaller businesses hit by the impact of coronavirus measures to apply for up £50,000, with the Government guaranteeing 100% of the advance. Meaning Small companies will be able to access 100% taxpayer-backed microloans following concerns about the speed of access to existing COVID-19 CBILS loan schemes.
The Chancellor Rishi Sunak bills the new small business micro-loan scheme as a “simple, quick, easy solution for those in need of smaller loans, businesses will be able to apply from a variety of lenders using a two-page form.
Bounce Back loan scheme, will open on will open at 9 am on Monday 4th May 2020, businesses can apply
- A loan of between £2,000 and £50,000 and access the cash within days
- loans will be interest-free for the first 12 months, and businesses can apply online through a short and simple form
- loans will be made available within 24 hours of approval
And unlike the existing Coronavirus Business Interruption Loan Scheme, banks will not retain any of the risks for the Bounce Back Loans. Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders say The Chancellor Rishi Sunak.
The Bounce Back loan scheme has been designed specifically to ensure that small to medium firms who need vital cash injections to be able to keep operating could get crucial finance within a matter of days. The scheme comes alongside the £6 billion awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.
The Government believe the Bounce Back Loans scheme will free up a backlog of credit checks by banks amid fears that many small businesses could go to insolvent before getting crucial funding. Following concerns in the growing number of delays in granting loans, after blaming the heavy workload, having to complete the necessary credit checks, and staff shortages.
Earlier this month the Governor of the Bank of England, Andrew Bailey, criticised the slow emergency lending saying this “had to be sorted out” and that taking on all the risk from banks could “unblock” the schemes for small business especially.
To be eligible for the Bounce Back loan scheme businesses must be:
- based in the UK;
- has been negatively affected by coronavirus;
- is not in difficulty’ on 31 December 2019.
If you or your business needs specific support and advice regarding The Bounce Back Loan Scheme, please contact us.