How To Apply For The Bounce Back Loan Scheme
Enterprise Nation has put together a guide detailing the features and how to apply for the Governments Bounce Back Loan.
The government’s scheme for quick loans to help small and micro businesses deal with coronavirus has launched. Here’s everything you need to know about the Bounce Back Loan Scheme and how to apply for funding.
The Bounce Back Loan Scheme (BBLS) has been set up in response to criticism that small businesses are struggling to get funding through the main Coronavirus Business Interruption Loan Scheme (CBILS).
The scheme is open to businesses, including sole traders and partnerships, that were trading on 1 March 2020
To speed up the process and get money to businesses quickly, borrowers fill in a two-page application form and self-certify their details which means lenders don’t have to verify the information. According to chancellor Rishi Sunak, most applicants should receive loans within 24 hours after being approved.
Loans are interest free for 12 months with no repayments due. After that, interest is capped at 2.5%.
Bounce Back Loan Scheme features
Up to £50,000 loan: Available loans are from £2,000 up to 25% of a business’ annual turnover or £50,000, whichever is lower. Turnover is based on a full calendar year so if your business was established after 1 January 2019, you should apply the 25% limit to your estimated annual turnover from the date you started.
100% guarantee: Lenders have a 100% government guarantee. The borrower always remains 100% liable for the debt.
Interest free for 12 months: The government will cover the first 12 months of interest.
Interest rate: The interest rate after the 12 months interest free period is set at 2.5% per year.
No repayments for 12 months: Borrowers will not have to begin principal repayments for the first 12 months.
No guarantee fee: Businesses and lenders do not have to pay a fee to access the scheme.
Finance terms: The length of the loan is for six years but early repayment is permitted without early repayment fees.
No personal guarantees: No personal guarantees are allowed and no recovery action can be taken over a principal private residence or principal private vehicle.
How to apply for a Bounce Back Loan
Accredited lenders are listed on the British Business Bank website.
Most lenders are currently only accepting applications from existing customers but it has been reported that HSBC is taking applications from non-customers if you set up a ‘feeder account’. More information here.
The current list of accredited lenders is as follows:
• Barclays
• Clydesdale Yorkshire Bank
• Danske Bank (Nothern Ireland)
• NatWest
• Santander
• RBS
• Ulster Bank (Northern Ireland)
• Lloyds Bank
• HSBC
• Bank of Scotland
• TSB
To speed up the process and get money to companies quickly, businesses self-certify through a short online form that is standard for all lenders.
Lenders do not need to carry out any credit checks or verify the long term viability of firms.
The government has previously said most businesses will get the finance within 24 hours although a press notice from the British Business Bank said money will be received “within days”.
You can’t apply if you’ve already got a CBILS loan but you can transfer a CBILS loan of up to £50,000 to BBLS before 4 November 2020. Following the launch of BBLS, the minimum loan for CBILS has been increased to £50,001.
For full details of the article written by Dan Martin please click on the link.