Coronavirus Bounce Back
With the Coronavirus Business Interruption Loan Scheme (CBILS) proving more miss than hit with small businesses the government today (28 April 2020) moved to launch a new borrowing option called Bounce Back.
Applications went live 4 May. You will need to approach one of the British Business Banks Accredited Lenders.
We want to be clear - this is a very welcome improvement on the current measures announced - CBILS was an extension of the Enterprise Finance Guarantee and really didn’t fit most small and medium sized businesses.
Bounce Back is not CBILS revamped - it is a new scheme and far more applicable to anyone with annual turnover (in our opinion) of less than £300,000. Over that amount, to us.
Businesses will be able to apply for loans of between £2,000 and £50,000 - with a 100% government guarantee.
What we know so far:
- Loans of between £2,000 and £50,000;
- Terms of up to 6 years;
- 100% guaranteed by the government (this is significant as it will probably remove the need for credit checks);
- No fees or interest in the first 12 months (this will probably mean that the fees will be added to the loan amount borrowed, interest charged on the whole amount, and a government grant to the business that covers the combined fees and first 12 month interest);
- Will be provided by banks and other lenders - see here for the list;
- Interest rates from the end of year one are not known but will be ‘reasonable’;
- Business must not be in any form of insolvency or debt restructuring process;
- Loans are limited to 25% of annual turnover.
If you have already claimed under CBILS you are not eligible for Bounce Back. If your CBILS loan is less than £50,000 you can apply to transfer to this scheme before 4 November 2020.
Please remember that this is a loan - not a grant. The 100% Guarantee protects the bank - not you and you remain liable for the full outstanding balance and any lender will exhaust their usual debt collection procedures before they are able to rely on the government guarantee.