Businesses across the UK have been particularly hard hit by the coronavirus outbreak, with many having to close their doors in March when lockdown was enforced.
But now applications for a new business loan scheme have opened in an effort to help small companies through the ongoing crisis.
What are Bounce Back Loans?
The Bounce Back Loan scheme has been launched to help small and medium-sized businesses navigate the coronavirus pandemic.
Businesses can borrow between £2,000 and £50,000, and the scheme is 100 per cent guaranteed by the government.
There won’t be any interest or payment fees in the first year, with rates set at 2.5 per cent per annum after the first 12 months.
Loan terms will be up to six years and the government will work with lenders to agree a low rate of interest for the remaining period of the loan.
The scheme launched at 9am on Monday (4 May), with eligible businesses now able to apply.
Chancellor Rishi Sunak announced the scheme in April, as part of several support measures to help thousands of firms and workers.
Mr Sunak said: "Small businesses will play a key role creating jobs and securing economic growth as we recover from the coronavirus pandemic.
"The Bounce Back loan scheme will make sure they get the finance they need - helping them bounce back and protect jobs."
Who is eligible for the scheme?
You are eligible to apply for a Bounce Back Loan if your business meets the following criteria:
- It is based in the UK
- It has been negatively affected by coronavirus
- It was not an ‘undertaking in difficulty’ on 31 December 2019
Who is not eligible for the scheme?
The following businesses in the UK are not eligible to apply for a Bounce Back Loan:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
What if I am already claiming funding?
If you are already claiming funding for your business under the Coronavirus Business Interruption Loan Scheme (CBILS), you cannot apply for a Bounce Back Loan.
If you have already received a loan of up to £50,000 under CBILS and would instead like to transfer it into the Bounce Back Loan scheme, you can arrange to do this with your lender until 4 November 2020.
How do I apply?
The Bounce Back Loan Scheme is available to businesses through a number of accredited lenders and partners across the UK.
Businesses need to approach a lender and fill in a short application form online, which self-certifies that it is eligible for a loan under the scheme.
If your business is eligible, it will be subject to appropriate customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Some state aid restrictions may also apply to your application.
Under the scheme, lenders are not permitted to:
- take any form of personal guarantee
- take recovery action over a borrower’s personal assets (such as their main home or personal vehicle)
The lender then has the authority to decide whether to offer you finance.
If one lender turns you down, you can still approach other lenders within the scheme.
To apply for the scheme, visit the British Business Bank website for further details.
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