Small businesses will now be able to borrow between £2,000 and £50,000 without any interest charges or repayments in the first year. The Bounce Back Loan Scheme (BBLS) has previously been a success in providing firms with accessible loans at low, affordable rates. “We’ve worked hard to give small businesses the help they need- from loans and grants to paying the wages of their staff,” chancellor Rishi Sunak said. Already, one million payment claims have been accepted and approved.
“Our small businesses are the powerhouse of our economy and will help drive our recovery as we bounce back from this global crisis,” he added.
What is the Bounce Back Loan?
The Bounce Back loan is a scheme from the government to enable businesses to access financial support quicker during the pandemic. The government has confirmed that it will cover any interest payable in the first 12 months through a Business Interruption Payment to the lender, so no charges will be paid by business owners. The interest rate will then increase to 2.5% a year.
Who is offering Bounce Back Loans & where to apply?
Currently there are 11 lenders involved in the scheme, including British banks.
Bank of Scotland Barclays Funding Circle HSBC Investec Lloyds Bank Metro Bank Natwest Paragon Santander Starling Bank
As a business owner, you can approach any of the lenders (which can be found on the Gov.UK website) directly on their website via the links above. There will be a short application to fill in to declare that you are eligible. The lender will then decide whether to offer the loan or something similar and you will be responsible for paying back the loan after the first 12 months. You can also apply to other lenders if you are not happy with the outcome. For government advice on how to reopen your business safely, read more here.
What does it mean for small businesses?
Overall, the loan is designed to give small- to medium-sized businesses the opportunity to bounce back after is likely to have been a difficult time in terms of the finances of your business. Particularly for those that have furloughed employees or even had to let go of offices and stores, the loan is an opportunity to get back on track without incurring any additional debt. The loans are repayable over six years, but can be repaid early without any penalty charges, so there is flexibility for business owners. In most cases, the Bounce Back Loan scheme is more affordable than a loan you would get from a private lender. It is also useful to know that as long as your business has been open and active before 1 March 2020, you are eligible to apply as a limited company or sole trader but you do have to display proof that your business has been adversely affected by the coronavirus pandemic. Here are some other finance support options options for micro to small businesses.
