Bounce Back Loans – what they are and how to apply
IMPORTANT NOTE re blogs on COVID-19
PLEASE NOTE THAT THE INFORMATION ON THIS PAGE MAY NO LONGER BE CURRENT. During the coronavirus pandemic, important news and announcements are being made daily. Official advice can change from one day to the next. We are doing our best to keep our COVID-19 information up to date on these two pages - but we recommend you check any information with official government, NHS or other responsible sources before acting on it.
UNFORTUNATELY WE ARE ONLY ABLE TO PROVIDE SPECIFIC ADVICE ON THE BOUNCE BACK LOAN PROCESS TO EXISTING CLIENTS OF THP CHARTERED ACCOUNTANTS.
IF YOU ARE NOT A CLIENT OF THP AND ARE LOOKING FOR FREE ADVICE PLEASE CALL THE HMRC HELPLINE OR CONSULT THE HMRC WEBSITE here
Over the last few weeks, the government has been increasingly criticised for its handling of the Coronavirus Business Interruption Loan Scheme (CBILS). Many firms have had difficulties accessing these loans and critics have suggested they should be 100% government guaranteed – not 80% as at present. Although CBILS has not changed, the chancellor has now stepped in with a different answer – a scheme of ‘Bounce Back Loans’.
What are Bounce Back Loans?
Bounce Back Loans are aimed specifically at small and medium-sized businesses. It is a completely separate scheme to CBILS and its loans are 100% guaranteed by government. As with CBILS, about 40 accredited lenders will deliver the scheme.
Which organisations are eligible?
UK-based businesses that have been negatively affected by coronavirus – and which were not an ‘undertaking in difficulty’ on 31 December 2019 – are eligible. Banks, insurers, re-insurers, public sector organisations and state-funded primary and secondary schools are not eligible.
How much can my business borrow?
You can apply for a Bounce Back Loan of up to 25% of your turnover (up to a ceiling of £50,000). The smallest amount you can borrow is £2,000. Importantly, there is no forward-looking test on viability – meaning acceptance rates will be high.
When can I apply for a Bounce Back Loan?
You can apply from 9am on Monday 4th May 2020. There will be a quick, standard form for you to complete but please note that we are unable to apply or complete this form on your behalf. We will publish an update on this nearer the time.
What are the repayment terms?
There will be no fees or interest on loans for the first 12 months. You do not have to make any repayments during the first 12 months either. Loans can be for up to six years. The interest rate (charged after 12 months) has now been set at 2.5%.
How long will it take to receive a Bounce Back Loan?
You should receive your money within 24 hours of approval.
I’ve already got a Coronavirus Business Interruption Loan. Can I apply for a Bounce Back Loan?
No. However, if you have already borrowed up to £50,000 under CBILS, you can ask your lender to transfer this to the Bounce Back Loan Scheme. You have until 4th November to do this.
Where can I find official guidance on Bounce Back Loans?
The government guidance on the scheme is published here.
Our take on Bounce Back Loans
This new scheme is a simple and much-needed way for SMEs to borrow money to help weather the coronavirus pandemic. It is less bureaucratic that CBILS and will hopefully result in a higher level of successful applications. In particular, we welcome the ability for SMEs to transfer existing CBILS loans to the Bounce Back Loan Scheme. If you’d like any advice on this, or any aspect of either scheme, please get in touch but please note that we cannot apply on your behalf.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.