Bounce Back Loans for small business

Bounce back loans and how to apply

The Chancellor of the Exchequer’s Bounce Back Loan Scheme (BBLS) has thrown a lifeline to thousands of cash-starved businesses trying to survive the effects of coronavirus.  The scheme is simpler and quicker to access than the Coronavirus Business Interruption Loan Scheme (CBILS) and has an initial 12-month interest (and repayment) free period as well as a 100% government guarantee for loans of up to £50K.  The Bounce Back Loan Scheme will hopefully be the light at the end of the tunnel for small and micro business owners who have struggled to access finance during this pandemic.  We outline what you need to know below…

What are bounce back loans exactly?

Bounce back loans are delivered by lenders accredited by the British Business Bank and target small businesses in all sectors.  They are separate from the Coronavirus Business Interruption Loan Scheme (CBILS) which is for larger amounts, but not 100% state-guaranteed.  You are able to switch to the bounce back loan scheme even if you have already applied for the CBILS scheme.

A bounce back loan allows you to:

  • Apply for a loan from £2,000 up to 25% of your business turnover, with a maximum loan available of £50,000.
  • No interest will be charged, or repayments needed in the first 12 months.
  • After the first year the interest rate is set at 2.5% per annum (the repayment is fixed at six years).
  • You can repay the loan early if you wish without penalty. Some backs will allow you to part-repay or overpay.  The sooner you repay the loan once interest charges come into place, the smaller the overall cost so there are benefits to early repayment if you can manage it.
  • Businesses (the borrower) always remain 100% liable for the debt.
  • Bounce back loans are unsecure (but this is a good thing). ‘Secured’ loans such as mortgages, mean your home can be taken if you do not repay.  With this loan you do not have to provide the security (the government does) so it is far more difficult for your assets to be taken if you cannot repay.

What is the eligibility criteria for a bounce back loan?

  • Your business must have been established before 1 March 2020. It must also still be trading as a going concern at the point of application (temporary closure due to Conronavirus does not matter).  Any issues at the point of application must be due to Coronavirus.
  • Your business must be able to confirm that it is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility).
  • Your business must be able to confirm it is not in bankruptcy, liquidation or undergoing debt restructuring.
  • Credit ratings (business or personal) will NOT impact your eligibility (the loan will likely appear on your business credit report, but not on your personal one).

What banks are offering bounce back loans and how do I apply?

You can find a list of current accredited lenders and partners offering the BBLS  on the British Business Bank website (which is continually updated).

You should apply to the bank direct.  Simply select an accredited lender to apply for a bounce back loan.  It is a short online application and all banks charge the same 2.5% annual interest.  You will benefit from having the following details to hand when you apply:

  • Details of your annual turnover
  • Your account number
  • The amount you want to borrow
  • A copy of your tax return
  • Confirmation that your business has been adversely impacted by Coronavirus.

The Scheme will initially open until 4 November 2020, with the government retaining the right to extend this.

Help and support

Detailed FAQs concerning the bounce back loan scheme can be found on the British Business Bank website.  Do not hesitate to contact our team if you need any help or advice regarding the bounce back scheme.  We are always here to support you.