The challenge facing so many businesses just now as they fight for survival in a very uncertain world is cash flow. For many months the Government has had in place a number of significant measures designed to ease the cash flow pressure on businesses with a view to keeping as much of our wealth and job creating infrastructure intact until we get through this outbreak.

The Chancellor, in recognising the importance of small businesses to our economy, announced a fast track small and medium sized business loan scheme on Monday 27 April, which is confidently called the Bounce Back Loan Scheme (BBLS). Although this gives us yet another acronym to remember, the positive news about the BBLS is that it should fast track access to additional funds within days in an attempt to replicate the speed and success of the Swiss loan scheme. 

Updates to the scheme announced on 17 December 2020

The Chancellor has now extended the deadline for applications to 31 March 2021 and reminded businesses that they can still apply to top up their loan where they haven't already borrowed the maximum amount available under the scheme.

Below we've provided a snapshot overview of the scheme.

Bounce Back Loan Scheme - eligibility

Almost every SME business can apply for the BBLS, with some limited exceptions, provided the business:

• Is based in the UK and was established on or before 1 March 2020
• Has been negatively affected by coronavirus 
• Was not an ‘undertaking in difficulty’ on 31 December 2019 
• Is not in bankruptcy, liquidation or undergoing debt restructuring at the time of apply for the loan
• Is not in a restricted sector which includes the following: banks, insurers. reinsurers, public sector bodies or grant-funded further education facility or a state-funded primary or secondary school
• Has not already accessed a loan of up to £50,000 through CBILS although it will be able to transfer the CBILS loan into the BBLS before 4 November 2020 

Businesses must certify that they are not a “business in difficulty” at 31 December 2019 if they are applying for £30k or more. However a “business in difficulty” will remain eligible under the BBLS if it has not have received more than €200,000 in de minimis State Aid including the Bounce Back Loan and the 2.5% contribution made by the government in respect of the interest payable to the lender for the first 12 months of the loan term.

What you need to know

The key elements of the BBLS are: 

• The loan is capped at 25% of turnover and businesses will be able to borrow from £2,000 up to a maximum of £50,000 
• The lender will be provided by a 100% guarantee by the Government and there will be no fees, interest or repayments in the first 12 months 
• Businesses can apply online through a short and simple application form
• Businesses can access these loans through a network of accredited lenders 
• The loan term will be for a period of up to six years and there will be a low standardised level of interest cost for the remaining period of the loan 

The Government has also agreed with lenders that an affordable flat rate of 2.5% interest will be charged on these loans. And any business that has already taken out a Coronavirus Business Interruption Loan of £50,000 or less can apply to have these switched over to this new scheme.

The loans are available through a network of lenders, including the seven largest banks.

Deadline - the deadline for applications has now been extended to 31 January 2021. 

More information and how to apply

The scheme opened for applications on Monday 4 May 2020 and you can find full details of how to apply on the dedicated Bounce Back Loan Scheme website. In the first instance you are advised to approach your own bank but you can approach other lenders listed on the website, if you are unable to secure the finance you require. For more detailed information on the scheme visit the British Business Bank website. 

If you have any questions in the meantime, please do not hesitate to get in touch with me to arrange a chat.