A new government-backed loan is coming available very soon for small businesses. The new scheme will see up to £50,000 going to the UK’s smaller businesses that need vital funding immediately.
As part of the £6 billion awarded in business grants, the Bounce Back loan offers businesses a fast-track option to access vital funding they need in order to continue to operate.
The Chancellor of the Exchequer, Rishi Sunak, said:
“Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.“
The new scheme, announced by The Chancellor on Monday 27 April, is a way to provide a “simple, quick, easy solution for those in need of smaller loans”. Businesses can receive up to 25 per cent of its turnover from the new scheme, of up to £50,000 that is available to them.
The government will provide a 100% guarantee to accredited lenders for the loan. Loanees won’t pay interest on their loan for the first 12 months and with no fees attached, not a penny will be spent until repayments begin.
Loan terms will be up to 6 years, with no repayments due during the first 12 months. The government will be working closely with lenders to agree a low interest rate for the repayment period of the loan, with every measure being made to make it as easy as possible for businesses to repay.
Business Secretary Alok Sharma said:
“This rapid loan scheme offers additional protection so small companies across the country can get access to the finance they need immediately, as part of the unprecedented package of support we have put in place.“
You can apply to the loan providing your business:
– is based in the UK
– has been negatively affected by coronavirus
– was not an ‘undertaking in difficulty’ on 31 December 2019
You will not be considered for the loan if your business is:
– banks, insurers and reinsurers (but not insurance brokers)
– public-sector bodies
– further-education establishments, if they are grant-funded
– state-funded primary and secondary schools
You can not apply for the Bounce Back loan if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). It can be transferred, however, providing you have claimed up to £50,000. You have until 4 November 2020 to arrange this with your lender.
If you want to know more about the Coronavirus Business Interruption Loan Scheme (CBILS), read the details about it in our recent post.
The Bounce Back Loan will be available for small businesses from 4 May 2020. More information is expected soon, so keep an eye on our news features for updates. You can also read more about the scheme on the government website where application instructions will be published.
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