Bounce Back Loan Scheme

The Government’s Bounce Back Loan scheme went live on Monday with almost 100,000 applications submitted within the first 24 hours!

The scheme was introduced by the Government to make the loan application process easier for smaller businesses than the original Coronavirus Business Interruption Loan Scheme (CBILS) where banks have been criticised for the time taken to complete the application process and the use of personal guarantees.

The new scheme helps small and medium-sized businesses borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.  To qualify, a firm must have been trading on 1 March this year and not have been in financial difficulty before the start of the crisis.  The length of the loan is 6 years, but you can repay early without paying a fee.  The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year. Just like CBILS, the borrower always remains fully liable for the debt.

You may not be able to apply for the Bounce Back Loan scheme if you have already received funding via the CBILS, however, if you have received up to £50,000 of funding through the CBILS you can transfer the loan to the Bounce Back Loan scheme.  This must be agreed before the 4th November 2020 with the lender.

The application must be made with the bank you currently have a business account with.  The application process has been made very simple with the lender asking you to fill in a short online application form to self-declare that you are eligible.  This form consists of only a small number of questions that include asking information about turnover, tax details, bank account and how the lockdown and Covid-19 has impacted your business. Applicants do not have to provide security and personal guarantees.  If successful, the funds will be made available within days.

The longer this crisis continues the more uncertainty there will be within the UK economy, particularly in the world of SMEs.  Cashflow is massive for smaller fledgling businesses as well as larger more established enterprises and now may be the time you need to consider a significant injection of cash.  Many businesses, quite rightly, will be wary of taking on debt, especially at a time like this.  However, in the long term, taking on a manageable amount of debt now may put you in a much stronger position in the future.  The terms of the loans in this scheme are agreeable and with careful financial planning should be easily managed.

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FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.