This new, 100% Government-backed scheme hopes to allow small firms to access vital working capital to survive.
Why Was the New Bounce Back Loan Scheme Introduced?
- Delays in processing applications and lengthy due diligence means businesses are not receiving financial aid in good time.
- Applicants are failing to meet the financial criteria set by lenders.
What Does the New Bounce Back Loan Scheme Offer Small Businesses?
- An online application process where the lender's main focus will be whether it had a viable business before the coronavirus (COVID-19) pandemic (thought to be a much quicker process than that involved for the CBILS).
- A six-year term loan from £2,000, up to 25% of its annual turnover, capped at £50,000 (and no early repayment fees).
- A set affordable interest rate of 2.5% paid by the Government for the first 12 month period and the applicant thereafter.
- 100% Government-backed for both capital and interest (unlike the CBILS which is 20% underwritten, so lenders will have more comfort when approving loans).
- No request for a personal guarantee or security over the applicant's personal assets.
What Should You Do Now?
- Approach your existing lender to check if it is one of the accredited lenders. At the moment these appear to be mainly the mainstream lenders but the British Business Bank is due to announce more as soon as their accreditations are confirmed.
- Approach an accredited lender if your existing lender is not one.
- Get in touch with one of our team members, should you want to explore any alternative products or options offered to you.
If you require specialist legal advice on the Bounce Back Loan Scheme, please contact Zeena Asghar in our Corporate Law team on 07795 802 268, or complete the form below.