New applications for the Bounce Back Loan Scheme were closed on March 31, 2021. If you’re looking for financing through a Covid-19 support program, please refer to the new Recovery Loan Scheme.
Covid-19 could disrupt the cash flow of small and medium-sized businesses, according to banks and other financial providers. Banks and the finance industry are committed to helping viable businesses trade in these uncertain times. All businesses, even sole traders, can still get support from banks and lenders.
The Chancellor announced the Bounce Back Loan (BBL) as part of a broad package of support for SMEs that includes capital repayment holidays, overdrafts and working capital extensions.
The BBL scheme is part of a range of government support measures that include Coronavirus Small Business Interruption Loans and Coronavirus Large Company Interruption Loans. British Business Bank and government continue to collaborate with the industry to support SME businesses that traded successfully before Covid-19 but may experience loss of revenues or disruptions in their cash flow.
- Lending options from £2,000 to £50,000 (with a maximum annual turnover of 25%)
- The government pays the interest for the first 12 months. This means that you will not pay any interest during the first year.
- For the first 12 months, there are no repayments.
- 2.5% interest rate
- 6-year loans without early repayment fees
- The government offers a 100% guarantee to the lender.
How can I access the Bounce Back Loan Scheme?
On March 31, the BBLS was closed to new applications
How can I apply for a ‘top-up’? What do I do with my current Bounce Back Loan?
Applications for BBLS top-u £’ are closed Closed on March 31, 2021, along with all new applications.
Does my business qualify for a Bounce Back Loan Loan?
A business must meet the following requirements to be eligible for the BBL program:
- It can confirm that it was adversely affected by the coronavirus (Covid-19).
- Based in the UK, it was still operating its business on March 1 2020.
- You can only apply for a loan between £2,000-£50,000. The annual turnover is limited to 25%.
- The business could declare that it was not insolvent or in any other way in trouble on 31/12/2019. Companies that cannot declare will be required to fill out a form to determine their eligibility for State Aid.
These businesses are not eligible for application:
- Banks, reinsurers and insurers (but not insurance brokers).
- public-sector bodies
- Further-education institutions, if grant-funded
- Secondary and primary schools that are state-funded
You cannot apply for a BBL loan if you have a Coronavirus Business Interruption Loan (CBIL).
Can I transfer an existing Coronavirus Business Incorruption Loan or Overdraft (CBIL) for less than £50,000 to a BBL loan
Customers with CBIL scheme loans or overdrafts of less than £50,000 will be able, by arrangement with lenders, to convert that facility to a BBL loan.
What information do I need to submit to apply for this position?
General information is required for the scheme application, such as business name, address and contact details. Bank account details are also needed. A series of questions and declarations are required to determine eligibility.
Who may need additional information to confirm that the applicant is a company if they do not have a current business account?
Applicants who do not have a financial relationship with the lender might need to provide the necessary information when opening a bank account for a business.
How can I prove my viability?
On the application form, businesses self-certify that they have read and understood the loan repayments and that they will be able to repay the loan on a timely basis.
Do I have to pay interest on my loan?
The government will make a business interruption payment to cover the first 12 months of interest payments and any other lender-levied fees.
After these twelve months, interest will be payable at the government-determined rate of 2.5 per cent.
Is it possible to repay my loan early?
Yes. Yes. If you take out a loan under the BBL scheme, you won’t be charged any early repayment fees if you decide to repay your financing before its term ends.
After the initial interest-free period, you will be 100% responsible for repaying the loan. Twelve-month period.
What happens if I can’t repay my BBLs loan?
The Chancellor announced in September new “Pay as you Grow” policies. Measures to help existing BBL borrowers.
Borrowers have the choice to:
- Increase the term of the loan from six to ten years
- You can make interest-only payments for six months, and you can use this option up to three more times during the loan’s life.
- After six payments have been made, you can request a six month repayment holiday.
Which products are eligible for the scheme?
There are only loans that have a six-year fixed term. There are no early repayment penalties.
Does it apply to all industries?
This scheme applies to all business sectors with some exceptions.
Restrictions apply to businesses that operate in aquaculture, fisheries, logistics, or agriculture.
Bounce Back Loans cannot be used for activities related to aquaculture and fisheries by businesses.
When will the money for Bounce Back Loans end?
According to the government, there is no limit on total lending supported by the BBL scheme. It will be based on demand. If you don’t need financing immediate, it is not necessary to contact lenders immediately.
Is it a loan or grant under the BBL program?
This scheme does not grant any financial aid. Although the scheme guarantees that they will finance their loan, businesses still need to repay the facility or loan.
Businesses may be eligible for grants and other support measures from the government.
Do I need to provide a personal guarantee?
Is it possible to refinance my existing borrowing using a BBL?
Yes. Refinancing is not allowed to limit the scheme facility that can use.
I was denied a CBIL loan. What is the point of applying for a BBL in this instance?
You may be eligible for a BBL if you have been denied a CBIL.
It would help if you considered that eligibility for BBL schemes is different from CBILS, so you need to consider this when deciding whether or not to apply.
I applied for a CBIL loan below £50,000, but I am still waiting for a reply.
You can withdraw your application and apply to a BBL. You cannot apply for a CBIL loan, overdraft or CBIL loan below £50,000 after May 4, 2020.
What if the interest rate is different for each bank? Who decides the interest rate?
The government sets the interest rate for the BBL loan. It will also offer it to all BBL loans made by accredited lenders. Lenders cannot control or set this rate. After 12 months, the interest rate is 2.5% per annum.
How long should I have been trading?
Who must establish your business before March 1 2020? How long has your business been in existence? The trading history is not an eligibility requirement.
What is the turnover net or gross in VAT?
The amount of turnover is reported in financial accounts and tax returns.
How will a BBL loan affect my credit rating?
Your lender might register your Back Bounce loan with credit reference agencies. Credit ratings could be affected by any default or delay in repayment.