Last month, the government announced a brand-new loan scheme to support businesses through the coronavirus pandemic.
Announcing the package of measures, the Chancellor said: “Small businesses will play a key role creating jobs and securing economic growth as we recover from the coronavirus pandemic. The Bounce Back loan scheme will make sure they get the finance they need – helping them bounce back and protect jobs.”
Applications for the Bounce Back loan scheme open today (4th May 2020), so here’s what you need to know if you’re considering taking advantage of the support.
You will not have to begin principal repayments for the first 12 months, and neither businesses nor lenders have to pay a fee to access the scheme.
Credit institutions, public sector bodies, insurance companies and state-funded primary or secondary schools are not eligible to apply. Otherwise, businesses from all sectors can make an application for a Bounce Back loan.
You must self-certify and confirm that:
Steven Jones, chief executive of UK Finance, says that while affordability checks would ‘be lighter’, firms should still ‘think very carefully about their ability to repay the loan’.
That is because, despite the government guarantee, banks are required to first chase firms for money if they do not repay the loan. As a borrower, you will always remain 100% liable for the debt.
Mr Jones said: “These are loans, not grants, so if a business is already indebted and taking on further debt, they should think carefully before making an application.”
Your first step is to find a lender. Accredited lenders are listed on the British Business bank website. As of 10am on Monday 4th May, accredited lenders included: Bank of Scotland, Barclays, Danske Bank, Lloyds Bank, NatWest, Santander, RBS, HSBC, Ulster Bank, Yorkshire Bank and Clydesdale Bank.
You should approach a lender yourself, ideally via the lender’s website. Approach your own provider in the first instance, although you may also consider approaching other lenders if you are unable to access the finance you require.
The online application is seven questions long and you will have to self-certify that your business is eligible for a loan under the Bounce Back loan scheme.
Lenders do not need to carry out any credit checks or verify the long-term viability of firms.
Note that if one lender turns you down, you can still approach other lenders within the scheme.
Once your loan has been approved, the government has previously said that most businesses will get the finance within 24 hours. The British Business Bank said money will be received ‘within days’.
You can’t apply for the Bounce Back loan scheme if you already have a coronavirus Business Interruption Loan unless the Bounce Back loan will refinance the whole of your existing facility.
However, you can transfer a coronavirus Business Interruption Loan of up to £50,000 to the Bounce Back loan scheme before 4th November 2020.
Following the launch of the Bounce Back loan scheme, the minimum coronavirus Business Interruption Loan has been increased to £50,001.
If you need any more advice concerning your business or personal finances during these uncertain times, please get in touch.