Bounce Back Loans:
- Bower Up to £50,000
- For the first 12 months of the loan the interest is paid by the UK government, then 2.5% interest per year afterward
- Repayments are deferred for 12 months
Following the Chancellor of the Exchequer’s announcement on 27 April, the Bounce Back Loans Scheme opens for applications from today. Accredited lenders are not providing access to loans ranging from £2000 to £50,000. These loans include a 100% government guarantee and thus hold zero risk for individual lenders.
The application form is said to be streamlined with the process enabling access to funding within days.
The Bounce Back Loans Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The applicable interest rate was revealed by HM Treasury in a letter by the Chancellor posted on Friday.
The government will cover interest payable in the first year. Borrowers may receive up to £50,000or 25% of a business’ turnover. As no payments are due for the first 12 months the business does not have to pay any upfront costs.
Borrowers will begin principal repayments after the first 12 months on a straight-line basis.
There are no personal guarantees needed for these loans.
According to the British Business Bank, eligibility criteria is as follows:
- Confirm it is UK-based in its business activity, and established by 1 March 2020
- Confirm it has been adversely impacted by the Coronavirus (Covid-19)
- Confirm it is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility)
- Confirm it is not in bankruptcy, liquidation or undergoing debt restructuring
The Bounce Back Loans are part of a series of programs designed to backstop the economy that has been undermined by the COVID-19 pandemic.
The British Business Bank website will post the approved lenders.
Eligible companies will be subject to standard customer fraud like Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.